When you're unemployed, there is a mountain of things to worry about, and sometimes taxes may seem like the least of your worries. But it's vital to be on top of all things taxes, so it won't give you more additional stress down the line. Here some great tips from Kathy Pickering, the executive director of H&R Block's Tax Institute.
1. Expiration alert: All unemployment benefits in 2010 are taxable. In 2009, the first $2,400 in unemployment benefits were tax free — but this benefit has since expired.
- When claiming your unemployment benefits, you can choose to have 10% of your unemployment payment withheld to help pay your federal taxes. You can also withhold your state income taxes.
- Although withholding is voluntary, it is beneficial because it eliminates the need to make estimated tax payments.
- Start on tax withholding unemployment payments by filing Form W-4V, Voluntary Withholding Request, with the payer of the unemployment.
For five more money-saving tips from Savvy Sugar, read on here.