Daycare Tax Tips

Unemployment Benefits May Be Tax-Free in 2009

Should you request withholding?

All or part of your unemployment benefits received in 2009 will be tax-free under the American Recovery and Reinvestment Act.

Every person who receives unemployment benefits during 2009 may exclude the first $2,400 of these benefits when they file a tax return in 2010. For a married couple, the exclusion applies to each spouse separately. Thus, if both spouses receive unemployment benefits during 2009, each of them may exclude the first $2,400 of benefits from gross income.

If you expect to receive more than $2,400 in benefits in 2009, you should consider having tax withheld from your benefit payments. If you have already chosen to have tax withheld from your benefits, you should consider the $2,400 exclusion to determine whether to continue to have tax withheld. To request withholding to begin or end, use Form W-4V, Voluntary Withholding Request, or the equivalent form provided by the payer.

Posted on 2009-06-30 03:37:59