NOW:53214:USA01012
http://widgets.journalinteractive.com/cache/JIResponseCacher.ashx?duration=5&url=http%3A%2F%2Fdata.wp.myweather.net%2FeWxII%2F%3Fdata%3D*USA01012
48°
H 50° L 48°
Rain | 6MPH

Unemployment Compensation and Your Tax Return

Nov. 17, 2009

As most people are aware, unemployment rates skyrocketed in 2009 ultimately exceeding 10% of the work force last month in October. For many, this may be the first time they have ever been unemployed. Since tax time is rapidly approaching, here are a few things to keep in mind about the unemployment compensation you may have been receiving.

 

Here is a general review of what constitutes unemployment compensation (UEC).

 

Generally speaking, benefits include any amounts received under the unemployment compensation laws of the United States or of an individual state. Compensation also includes state unemployment insurance benefits as well as benefits paid to you by a state (or the District of Columbia) from the Federal Unemployment Trust Fund. It also includes railroad unemployment compensation benefits.

 

Supplemental unemployment benefits received from a company financed fund are not considered unemployment compensation for this purpose. These benefits are fully taxable as wages and are reported on Form W-2, Wage and Tax Statement.

 

Payments from a private fund, to which you voluntarily contribute, are taxable only if the amounts you receive are more than your total payments into the fund. This taxable amount is not unemployment compensation; it is reported as other income on Form 1040. It is worth noting that worker’s compensation benefits are also not considered unemployment.

 

If you were one of the millions of people who received unemployment compensation during the year, you should receive a Form 1099-G, showing the amount you were paid. As with other 1099 forms and W-2 statements, this should arrive sometime in January. Any unemployment compensation received must be included in your income.

 

While UEC is taxable income to you, under the American Recovery and Reinvestment Act of 2009, every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 of these benefits when they file their tax return next year. For a married couple, the exclusion applies to each spouse, separately. Thus, if both spouses receive unemployment benefits during 2009, each may exclude the first $2,400 of benefits they receive, potentially reducing total UEC income by $4,800.

 

Additionally, if for some reason you were overpaid some benefits, these get to be subtracted from the total compensation as well. Form 1099-G will indicate the amount of any overpayment for you to use on your tax return.

 

You should be aware that each state may have its own laws dealing with unemployment compensation. For example, in Wisconsin, while UEC is taxable, the Department of Revenue does not acknowledge the American Recovery and Reinvestment Act rules for the first $2,400 of income.

 

Last but not least, UEC can cause a tax liability if you are not careful with your tax planning. If you have not given any thought to what your 2009 tax liability might be, you may want to consult a tax professional before year end, especially if you have been unemployed for most of the year and have not had any withholding taxes removed from your benefit payments. There is still time to make an estimated tax payment which could reduce your tax burden come April 15th.

 

AmeriTax Tax & Financial Services has been helping clients with tax planning and filing tax returns for over 20 years. Located in West Allis, they can be reached by phone at 414-259-9040 or by email at ameritaxtips@wi.twcbc.com

 

This site uses Facebook comments to make it easier for you to contribute. If you see a comment you would like to flag for spam or abuse, click the "x" in the upper right of it. By posting, you agree to our Terms of Use.

Suburban News Roundup

E-mail Newsletter

Your link to the biggest stories in the suburbs delivered Thursday mornings.


Enter your e-mail address above and click "Sign Up Now!" to begin receiving your e-mail newsletter
Get the Newsletter!

Login or Register to manage all your newsletter preferences.

Community Watch

» Greenfield council approves 2015 budget after no one speaks at hearing 11/19

» Draft report admits economic harm to West Allis of likely ramp closure 11/19

» Low registrations cause drug, alcohol program postponement at Whitnall 11/17

» West Allis has possible developer for former lime pit 11/11

» Suburban roundup: Week three of the WIAA football postseason 11/10

» Election roundup: How the Milwaukee suburbs and Lake Country voted Updated:  11/5

» Greenfield ups emergency preparedness 11/5

» No more tag and bag, Advanced Disposal official says 11/5

» Daniel Riemer wins Assembly District 7 11/4

» Joe Sanfelippo re-elected in Assembly District 15 11/4

» West Allis to rescue Milwaukee County's portion of Root River path 11/4

» In Whitnall presentation, Your Choice warns people of consequences of drug use 11/4

» West Allis city budget finds no resistance 11/4

» Suburban roundup: Week two of the WIAA football postseason Updated:  11/3

» Man charged with felony stalking, accused of dropping sex toys near teens 11/3

» Photo Gallery: WIAA state soccer tourney day one 10/30

» Liberace still glitters in West Milwaukee lore 10/30

» Former West Allis strip club owner sentenced to prison for perjury 10/29

» Greenfield takes steps toward taxing district for infrastructure work 10/28

» West Allis to hold hearing on 0.28 percent levy increase 2015 budget 10/28

» Ball rolling on Loomis Crossing in Greenfield 10/28

» Suburban roundup: Week one of the WIAA football postseason 10/27

» Scott Walker ramps up campaign with start of 10-day tour of Wisconsin Updated:  10/25

» Preps football photos of the week: Level 1 10/24

» Speakers split evenly on West Allis proposed sewer lateral program 10/22

View All Posts Got a tip? Welcome rss
Deal Watch - Milwaukee

Milwaukee's Best Discounts & Deals

Advertisement

Local Business Directory

CONNECT