There are several tax tips available for those that are unemployed. If you find yourself in a position where you lose your job, you likely know that it is possible to receive unemployment benefits from the Federal Government. The cash assistance that you may receive will assist in providing you with a small portion of financial relief; however, it is essential that you know and understand that the benefits that you receive are taxable. The following outlines several tax tips as it pertains to unemployment benefits. If you receive this form of compensation, it is imperative that you continue reading to ensure that you are fulfilling your financial responsibilities to the Internal Revenue Service:
- As stated previously, your unemployment benefits are all taxable. The benefits should be outlined as “income” for the year in which you receive it. When you file your taxes, you should file the Form 1099-G that you receive. Not only will this form outline the amount that was paid to you in unemployment benefits the prior year, but, it will also outline the amount of federal tax money that was withheld with your payments.
- Your unemployment benefits will be received from one of two sources – either the United States or the state where you reside. In order to determine where you are receiving your unemployment benefits and for tax tips pertaining to those benefits, you should obtain a copy of the “Publication 525”.
- If you are drawing unemployment benefits and are part of a union, you must include any and all benefits that you received from regular-based union dues in your income total for the year when filing taxes. If you make contributions, you are only obligated to report income that was in excess of your contributions for the entire year.
- The next of the many tax tips for the unemployed is to have federal-based taxes withheld from your payments. You may do this by using the Form W-4V, which is called the “Voluntary Withholding Request”. If you fail to do this, you may find that you are obligated to make estimated tax payments periodically throughout the year.
- If you require more tax tips or would like more information on unemployment benefits and your taxable liability, you should visit the website, IRS.gov, for assistance. There is a special page that is called “What Ifs” that answers a wide array of questions. You will also discover information on possible tax credits that you may qualify for, assistance steps if you are unable to pay the IRS, and more!
As you can see, there are several tax tips for the unemployed. In today’s world, there are millions upon millions of people that are currently receiving unemployment compensation due to economic downturns and company downsizing. If you are one of these individuals, it is important that you learn as much as possible about your tax obligations. Failure to uphold those financial obligations could result in an immense amount of difficulties for you – personally and professionally. By following the tax tips outlined here, you are sure to stay ahead of the game while seeking suitable employment opportunities.