taxguy057 Posted January 22, 2010 Report Posted January 22, 2010 Had some one ask me today if I had heard about where the IRS was not going to tax unemployment benefits recieved last year. He couldn't cleary state what or how this was going to take place so told him I'll hit my blogger friends out there for some help. Me personally, I haven't heard anything such. Has anyone else maybe or is this just on somebody's "Don't Want To Pay Taxes Wish List?" :read: Quote
Lion EA Posted January 22, 2010 Report Posted January 22, 2010 First $2,400 or so is not taxed. I'll have to look up the exact amount if I have anyone on unemployment for 2009. Quote
bstaxes Posted January 22, 2010 Report Posted January 22, 2010 No tax on the first 2400 per recipient. After that it is taxed. Quote
taxguy057 Posted January 22, 2010 Author Report Posted January 22, 2010 Anything special I have to do or does program automatically adjusts? Quote
taxguy057 Posted January 22, 2010 Author Report Posted January 22, 2010 at the same time he thinks its the whole benefit amount received? Doesn't sound right to me... Havent heard or seen that anywhere and if true it would be all over the news...Guess I need to look at the source... he said they work at HRB! :lol: Quote
Margaret CPA in OH Posted January 22, 2010 Report Posted January 22, 2010 First $2,400 of Unemployment Benefits Tax Free for 2009 IR-2009-29, March 26, 2009 WASHINGTON — All or part of unemployment benefits received in 2009 will be tax free for many unemployed workers, according to the Internal Revenue Service. “This morning we learned that a record 5.6 million people were receiving unemployment benefits in the middle of March. This underscores the need for the relief provided by the American Recovery and Reinvestment Act, which includes making the first $2,400 of unemployment insurance exempt from tax,” said IRS Commissioner Doug Shulman. “I urge all unemployed workers to take this special tax break into account as they plan their tax withholding and quarterly estimated tax payments for the year. This change offers a helping hand to millions of Americans who are out of work and struggling to make ends meet.” Under the American Recovery and Reinvestment Act, enacted last month, 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 from income the first $2,400 of benefits they receive. The new law doesn’t affect the return taxpayers are filling out now. Unemployment benefits received in 2008 and prior years remain fully taxable. Unemployed workers can choose to have income tax withheld from their unemployment benefit payments. Withholding on these payments is voluntary. However, choosing this option may help avoid a surprise year-end tax bill or a possible penalty for having paid too little tax during the year. Those who choose this option will have a flat 10 percent tax withheld from their benefits. Unemployed workers who expect to receive more than $2,400 in benefits this year should consider having tax withheld from their benefit payments in excess of that amount. Those unemployed workers who have already chosen to have tax taken out of their benefits, should consider the $2,400 exclusion in determining whether to continue to have tax withheld. Use Form W-4V, Voluntary Withholding Request, or the equivalent form provided by the payer to request withholding to begin or end. Form W-4V is also available on IRS.gov or by calling the IRS toll-free at 1-800-TAX-FORM (829-3676). Quote
Ray in Ohio Posted January 22, 2010 Report Posted January 22, 2010 Anything special I have to do or does program automatically adjusts? I entered the full amount on the worksheet and only the amount over $2400 showed on the 1040. Nothing special you have to do. IMO. I believe the program calculates it correctly if you enter the full amount of the 1099. Quote
taxguy057 Posted January 22, 2010 Author Report Posted January 22, 2010 First $2,400 of Unemployment Benefits Tax Free for 2009 IR-2009-29, March 26, 2009 WASHINGTON — All or part of unemployment benefits received in 2009 will be tax free for many unemployed workers, according to the Internal Revenue Service. “This morning we learned that a record 5.6 million people were receiving unemployment benefits in the middle of March. This underscores the need for the relief provided by the American Recovery and Reinvestment Act, which includes making the first $2,400 of unemployment insurance exempt from tax,” said IRS Commissioner Doug Shulman. “I urge all unemployed workers to take this special tax break into account as they plan their tax withholding and quarterly estimated tax payments for the year. This change offers a helping hand to millions of Americans who are out of work and struggling to make ends meet.” Under the American Recovery and Reinvestment Act, enacted last month, 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 from income the first $2,400 of benefits they receive. The new law doesn’t affect the return taxpayers are filling out now. Unemployment benefits received in 2008 and prior years remain fully taxable. Unemployed workers can choose to have income tax withheld from their unemployment benefit payments. Withholding on these payments is voluntary. However, choosing this option may help avoid a surprise year-end tax bill or a possible penalty for having paid too little tax during the year. Those who choose this option will have a flat 10 percent tax withheld from their benefits. Unemployed workers who expect to receive more than $2,400 in benefits this year should consider having tax withheld from their benefit payments in excess of that amount. Those unemployed workers who have already chosen to have tax taken out of their benefits, should consider the $2,400 exclusion in determining whether to continue to have tax withheld. Use Form W-4V, Voluntary Withholding Request, or the equivalent form provided by the payer to request withholding to begin or end. Form W-4V is also available on IRS.gov or by calling the IRS toll-free at 1-800-TAX-FORM (829-3676). Thx Margaret your the best! so my question again will the program sort this out when we add a 1099-G to the return or need i do something xtra to claim the exemption? Quote
chuck Posted January 22, 2010 Report Posted January 22, 2010 Thx Margaret your the best! so my question again will the program sort this out when we add a 1099-G to the return or need i do something xtra to claim the exemption? put total from the W-2G program does the rest. Quote
chuck Posted January 22, 2010 Report Posted January 22, 2010 Would think you would have known about the $2400. Quote
mcb39 Posted January 22, 2010 Report Posted January 22, 2010 put total from the W-2G program does the rest. I did a bunny jump to the worksheet just to make sure it was doing it right. It correctly subtracted the $2400. Quote
taxguy057 Posted January 22, 2010 Author Report Posted January 22, 2010 Thanks all! That's why I hang around you guys!! :P Quote
Margaret CPA in OH Posted January 22, 2010 Report Posted January 22, 2010 Well, we were wondering about that... Quote
Lion EA Posted January 23, 2010 Report Posted January 23, 2010 I thought it was because we made you laugh! :spaz: Quote
taxguy057 Posted January 23, 2010 Author Report Posted January 23, 2010 I thought it was because we made you laugh! That's it!!! :P Quote
taxguy057 Posted January 23, 2010 Author Report Posted January 23, 2010 Well, we were wondering about that... I know right!! What's wrong with me??? :wacko: Quote
Catherine Posted January 23, 2010 Report Posted January 23, 2010 One thing to keep in mind is that some states (MA for one) is NOT exempting that first $2400 from taxable income. I'm going to have to check flow-through numbers carefully, as I've seen plenty of instances with ATX over the years where numbers do NOT go where they're supposed to go. Catherine Quote
kcjenkins Posted January 23, 2010 Report Posted January 23, 2010 Everyone should check how their state treats UI and then check that the program is doing it right in their state. My state, for example, does not tax any of it. It's things like that that are the easiest for the programmers to miss during the rush to complete forms. They always fix them fast once they know of the problem, so be a 'beta tester' for your state, and check it out. If there is a problem, post it to the support folks, and in the suggestion box as well. Quote
taxguy057 Posted January 23, 2010 Author Report Posted January 23, 2010 One thing to keep in mind is that some states (MA for one) is NOT exempting that first $2400 from taxable income. I'm going to have to check flow-through numbers carefully, as I've seen plenty of instances with ATX over the years where numbers do NOT go where they're supposed to go. Catherine How can a state exempt themselves from federal rules? What would be their reasoning behind it? Quote
kcjenkins Posted January 23, 2010 Report Posted January 23, 2010 Every state can decide how THE STATE will tax it's citizens. There is no requirement that they either tax something the Feds tax, or exempt something just because the Feds do. So some states don't tax ANY INCOME, some tax only investment income, and some simply tax whatever the Feds tax, just for simplicity. That's what makes state taxes so much fun! Quote
JRS Posted January 23, 2010 Report Posted January 23, 2010 How can a state exempt themselves from federal rules? What would be their reasoning behind it? Move to California and find out!!! From what I am aware of, Ca has not conformed to Federal tax law since 2005. There are a few exceptions, but not many. Ca doesn't tax unemployment. Quote
Catherine Posted January 23, 2010 Report Posted January 23, 2010 Move to California and find out!!! From what I am aware of, Ca has not conformed to Federal tax law since 2005. There are a few exceptions, but not many. Ca doesn't tax unemployment. Mass de-coupled from the Feds years ago but maintained those old forms for base calculations. So the statutes read "the base for calculating XYZ is the result from the 1993 Form 1040 Line blah-blah calculation". I think it's 1993. Circa then, anyway. And not only is Mass. not exempting the first $2400 of UI the way the feds are, they are recapturing the COBRA subsidy as income as well. It's going to be fun getting those amounts from clients! Catherine Quote
mcb39 Posted January 23, 2010 Report Posted January 23, 2010 Wisconsin has MANY adjustments between Federal and State. Several Federal credits, etc are not allowed or are adjusted as in capital gains. In other cases, WI has credits or subtractions from Federal income. Makes preparing a tax return somewhat of a two-way street. Quote
Tax Prep by Deb Posted January 23, 2010 Report Posted January 23, 2010 California also does not tax unemployment. In the past the program has always made the correct adjustment. Deb! Quote
kcjenkins Posted January 23, 2010 Report Posted January 23, 2010 The feds may tax the Cobra Premium Assistance too. If modified AGI is more than $125K [$250K MFJ]. See the worksheet for Line 60 of the 1040. It's line 29 on that worksheet to take you to the Cobra worksheet. Nice little notice at the bottom "Contact your former employer or health insurance plan to obtain the total premium assistance, if unknown." Any one want to bet it's not almost always 'unknown'? Quote
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