| With all of the layoffs resulting from businesses going | | | | based on the unemployed benefits received in excess |
| out of business, it's important for you to know whether | | | | of the $2400 threshold. It's sad, since you would think |
| or not unemployment benefits received during 2009 | | | | that the unemployed, now more than ever, have to |
| are taxable and also how to report those | | | | give back a portion of those tax benefits that were |
| unemployment benefits when filing your 2009 tax | | | | received in excess of $2400 to the government, when |
| returns. There is some good news, that a portion of | | | | they probably really need that money for food and |
| the unemployment taxes are not taxable for 2009. | | | | other basic necessities for the family. |
| As a consequence of President Barack Obama | | | | For those individuals unfamiliar with the forms and |
| signing the American Recovery and Reinvestment Act | | | | believe they have received unemployment |
| of 2009, the first $2,400 of unemployment income | | | | compensation, the unemployment compensation is |
| received during 2009 will not be taxable income. This | | | | shown on Form 1099-G. The taxpayer would report |
| section of the new legislation, is an improvement from | | | | the unemployment compensation on line 3 of Form |
| the prior year, because for many unemployed | | | | 1040EZ, line 13 of Form 1040 A or line 19 of Form 1040. |
| workers, the first $2,400 of unemployment benefits | | | | Further, if you made contributions to a government |
| received in 2009 will not be subject to taxes. | | | | unemployment compensation program, then you are |
| With millions of Americans out of work, this piece of | | | | required to reduce the amount you report on Form |
| legislation provides some relief, in the form of a tax | | | | 1040 by the total amount of those contributions that |
| break for unemployed taxpayers. Under this new tax | | | | you made to a governmental unemployment |
| law, each person who receives unemployment | | | | compensation program. Also, if you received an |
| benefits during 2009 is eligible to exclude the first | | | | overpayment of any unemployment compensation |
| $2,400 of these benefits when they file their 2009 tax | | | | during 2009 and you have to repay any of that |
| returns. | | | | amount in 2009, then reduce the amount you report by |
| Withholding on unemployment benefits was not | | | | the amount you repaid. |
| mandatory during 2009. Therefore, for those | | | | For those individuals seeking more information about |
| taxpayers who had proper withholdings, they will now | | | | the treatment of overpayment and for other |
| be able to avoid a surprise and a year-end tax bill or | | | | information concerning the taxability of unemployment |
| possibly a penalty for not paying sufficient taxes | | | | compensation please refer to IRS Publication 525. |