Tools To Estimate Your Income Tax Refunds

Our economy is still trying to get out of the shackles of economy meltdown. Many of the workers lost their jobs while many others were put on bench. Conditions in past have been tough and have effected almost the entire nation directly or indirectly. The number of people who did not had regular jobs all through the year have grown. Government also has to be considerate towards them while asking them to pay their taxes. Let us study further what impact unemployment will have on your income taxes in the current tax year.

In view of many different income tax provisions related to handling unemployment often returns in this segment can be bit tricky. Numbers of factors are to be considered before arriving at the best way in which your tax liability can be minimized in short and long term. Following are the answers to some of such common questions which are to be faced by unemployed taxpayers.

Question: Are my unemployment benefits taxable?
Answer: This is the first question that comes to the mind in case you are unemployed and receiving certain unemployment benefits. The answer in simple terms would be a Yes. Any benefits which you received during your unemployment period will be added on to your income and be taxable for the purpose of federal returns. Practically if there has been tax withheld by your previous employer and as per your tax return it is in excess of your tax liability you will receive it back as your tax refund.

Question: From where will I get the information related to my unemployment benefits?

Answer: Authorities keep a proper track of the benefits you have received during the period you were unemployed. At the end of the year you will receive statements from the concerned authorities by way of form 1099G which will have complete details. You can use these details while filing your yearend return. In case you do not get this form (1099G) by early February kindly follow up from your end to obtain it.

Question: Is any part of my unemployment benefits non-taxable?
Answer: Yes there is good news in this regards. The first $2400 which you receive as part of your unemployment benefits are non-taxable and cab be deducted from your taxable income. The balance amount of unemployment benefits must form part of your taxable income.

These were some of the basic questions related to effect of unemployment can have your tax return and there possible answers.

By: conor williamss

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