Saturday, December 26, 2009

Tax break for the unemployed

Unemployment compensation includes benefits to unemployed taxpayers that a state paid from the Federal Unemployment Trust fund. These benefits are reported on Form 1099-G (pdf.) and must be included on line 19 of Form 1040.

For 2009, taxpayers are able to exclude the first $2,400 of these benefits when they file their tax return. For a married couple, the exclusion applies to each spouse separately. If both received unemployment income in 2009, each would be able to exclude the first $2,400 of their income.

Those who are currently receiving benefits can use Form W-4V (.pdf) to have federal taxes withheld.

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