Glendale Taxes | Unemployment
If you lose your job, you may be fortunate enough to receive unemployment benefits. These payments can be a financial relief for someone without a steady paycheck. But did you realize these payments are taxable? Here are some other facts about unemployment benefits you may not be aware of.
- Unemployment is taxable. This comes as a surprise to a lot of tax payers. All of your unemployment benefits must be included in your income on your personal income tax return. You should receive a form 1099-G from your state unemployment agency. This form will show the entire amount you received as well as any federal income tax you had withheld from your benefits. This income is reportedly similarly to a W2 or 1099.
- Union benefits may be taxable. You must include benefits paid to you from regular union dues in your income. Other rules may apply if you contributed to a special union fund and those contributions were not deductible. These payments would only be taxable to the extent that the payments exceed your contributions.
- You may have income tax withheld. You can choose, when you apply for your unemployment benefits, to have federal income tax withheld from your unemployment benefit check. You can have this done by using a form W4. If you choose to not have voluntary withholding on your unemployment benefits, it is highly advisable to make estimated income tax payments. If you do not have enough withholding or estimated tax payments made, you may face an underpayment penalty when you file your form 1040.
- Contact the IRS for help. Should you be experiencing a financial hardship and not able to pay your tax bill, contact the IRS to see what steps can be taken to ease the burden.
If you have any other questions or would like to discuss this further, do not hesitate to contact us at Dusseau & Makris, PC, your Phoenix CPA firm.