Unemployed individuals often need to pay tax too!
As of January 6, 13.1 million people, or 8.5% of the workforce still remain unemployed.* Both the U.S. and state government departments of employment assistance created a vast safety net for those workers who lost their jobs providing them with unemployment income for up to 99 weeks. While this government benefit is a true marker of a nation that cares for the downtrodden, unemployment income often does not replace the full incomes unemployed workers once had.
One way that unemployed workers compensate for less income is not by tax planning, but by not withholding any taxes from their unemployment income checks. Be aware – unemployment income is taxable! Those taxpayers collecting unemployment income must be cognizant of withholding taxes so that they don’t get surprised at tax filing time with a big tax bill. The best remedy to prevent this from happening is to meet with a CPA or Enrolled Agent to do some tax planning to figure how much tax you should withhold from each unemployment check
*http://www.bls.gov/news.release/pdf/empsit.pdf
Stuart Steinberg, CPA, MBA has owned a strategic tax planning practice on the North Shore for 23 years. Please feel free to contact him anytime and let Erock Tax take care of you!