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Do You Have to Pay Taxes If You Are Unemployed?

Posted by on March 16, 2012
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Do You Have to Pay Taxes If You Are Unemployed?

The unemployed still have to pay taxes, even on unemployment benefits.

Whether or not you have to file a tax return has nothing to do with your employment status. It depends entirely on how much income you received during the year.

If your income falls above the income threshold for your filing status, you have to file a tax return. Unfortunately, it doesn’t matter to the IRS if you happen to be out of a job.

The unemployed should note, however, that unemployment benefits do qualify as taxable income. In other words, your unemployment payment received is considered income.

According to the IRS, unemployment compensation includes

Any amounts received under the unemployment compensation laws of the United States or of a state. It includes state unemployment insurance benefits and benefits paid to you by a state or the District of Columbia from the Federal Unemployment Trust Fund. It also includes railroad unemployment compensation benefits, disability benefits paid as a substitute for unemployment compensation, trade readjustment allowances under the Trade Act of 1974, and unemployment assistance under the Disaster Relief and Emergency Assistance Act of 1974. Unemployment compensation does not include worker’s compensation.

How To Report Unemployment Benefits on Your Taxes

With your unemployment benefits, you’ll receive  Form 1099-G [Certain Government Payments]. This form should show exactly how much you received. That total amount must be entered on your tax return.

The IRS already knows you received this money, so don’t try to hide it or you could face an audit as well as penalties and interest.

When you file your return, report your unemployment income on line 19 of Form 1040 [U.S. Individual Income Tax Return], line 13 of Form 1040A [U.S. Individual Income Tax Return], or line 3 of Form 1040EZ [Income Tax Return for Single and Joint Filers with No Dependents], depending on which tax return you decide to file.

Rather than going to the hassle of filling out these forms and calculating your taxes, you’ll be able to just enter your unemployment income and any other tax information on the PriorTax tax application. From there, we’ll look for any way to boost your total refund!

Other Unemployment Information To Consider

But before you get too exasperated, you should know that unemployed people stand to benefit from filing a tax return. A number of tax credits are available that could result in a pretty large refund for those who don’t make very money, including the following;

Earned Income Credit
Additional Child Tax Credit
American Opportunity Credit
Credit for Federal Tax Paid on Fuels
Credit for Prior Year Minimum Tax
Health Coverage Tax Credit

If you’re unlucky enough to be unemployed, you probably will have to file taxes, but there’s no reason to fear the tax man – the progressive U.S. tax code tends to be pretty generous to those with low incomes.

Photo via Cea. on Flickr.

5 Responses to “Do You Have to Pay Taxes If You Are Unemployed?”

  1. Alison says:

    is the deadline to file taxes on eginrnas made in 2006. Your employer should withhold taxes each paycheck (based on a calculation from your W4 form that they will provide you with). In January of 2008, you employer will provide you a statement (form W2) which you will use by April 15, 2008 to file a form 1040 (or 1040a or 1040ez) to even up what you actually owe and what was withheld during 2007.

  2. perla says:

    I received $6,359 from unemployment for2014.i started my new job in 11/2014 grossed $2,450. If I file for taxes will I get a return with having one dependent.?

    • admin says:

      Hi Perla,

      I suggest creating an account on Priortax and entering your information. Before you enter any payment information, you will be able to see if you will owe or be receiving a refund.

  3. Jose says:

    Do I have to file some kind of form. If I did not work the whole year.

    • admin says:

      Hi Jose,

      Although earned income is an important factor in determining whether or not you need to file a tax return, it is not the sole component. Take a look at the IRS tool HERE to determine whether you’ll need to file for the year. It will only take you a few minutes to complete and will give you an accurate answer to your question based on more information about your tax situation.

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