Unemployment Benefits And How They Apply To TurboTax
Unfortunately, Americans continue to lose their jobs due to layoffs and other unfavorable circumstances. Most of these laid off workers are eligible for unemployment benefits. A lot of people don't realize that these funds are 100% taxable as income. Therefore, individuals should use TurboTax in order to make this process a breeze.
All unemployment compensation must be listed for federal and state governments. Typically, individuals will receive Form 1099-G, titled "Certain Government Payments". This document shows how much unemployment a person receives and how much was withheld for tax purposes. TurboTax offers a step-by-step guide to this form.
Multiple types of unemployment benefits exist today. However, every form of unemployment is taxable regardless of the source. Publication 525, titled "taxable and Non-Taxable Income" can help most taxpayers. Plus, TurboTax offers easy instructions and great resources on unemployment benefits. All taxable income must be reported to avoid stiff penalties after all.
If a taxpayer receives unemployment from their union, then such funds must be reported, too. Contributions to a special union fund usually aren't deductible. Income should only be included when it goes over the amount of funds contributed to the fund. Once again, TurboTax provides a clear explanation for applicable tax laws.
By filling out the W-4, taxpayers can have federal taxes taken from their unemployment benefits. Such an option is smart for individuals that don't have any other income during the year. Otherwise, estimated tax payments and other penalties might apply to a given person. TurboTax helps explain penalties that are assessed against taxpayers and keeps everything in plain language.
Taxpayers facing financial difficulties should contact the IRS as soon as possible. Fortunately, extra tax breaks are available for individuals in dire financial situations. The IRS can hep a person set up a payment plan to tackle their tax debts, too. In the end, individuals that avoid these issues will find themselves pursued by the Internal Revenue Service. Audits, liens, and other nasty problems can arise.
Unemployment and Taxes Explained - TurboTax Tax Tips Video
If you had a time this past year when you were without employment and collected unemployment benefits from the state government, you might feel that taxes are not a part of receiving these benefits that your past employer had paid for you. You will discover though, that you need to file a tax return and you are eligible for some benefits because of your situation. This video from TurboTax will explain the tax laws that apply to your unemployment benefits.
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