Can you believe tax time is almost here again? There are several unique issues related to taxes for job seekers and those who are unemployed. As always, I've asked the team at Westwood Tax to chime in:
These days, the airwaves are littered with commercials promoting tax preparation software and a certain tax preparation chain. These commercials indicate the unofficial beginning of tax season. In the coming days and weeks, you will most likely start to receive envelopes bearing the warning that important tax information is enclosed.
One of those envelopes may contain a 1099 from your resident state indicating how much unemployment income you received during the past calendar year. It may even indicate federal and state withholding.
Back in 2009, a special tax break allowed the first $2400 in unemployment income to be tax free. Unfortunately this provision was not renewed for 2010. Therefore, all unemployment income is taxable at your ordinary rate.
In a cruel twist, it may be possible that even though you are unemployed, you have a balance due. We recommend that when applying for unemployment income, you should always elect to have federal and state withholding. The few dollars coming out from your weekly check is definitely more manageable than owing larger amounts come tax time.
As a special promotion for Lavie’s blog readers, Westwood Tax & Consulting will offer 20% off income tax preparation when you mention Lion Cub Job Search. Unfortunately this offer will expire on March 15th and applies to new clients only. Give us a call at (516) 792-0505.
For your convenience, I've linked below several other tax related posts by Westwood that are important to keep in mind this time of year:
HIRE ME! Why Hiring Certain Employees Makes Sense During This Economic Downturn
Let the IRS help you during your job search
The 1099 and the Independent Contractor
- Lavie
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