IRS Tax Tips: Unemployment and Free Tax Help

IRS Offers Four Tips on Unemployment Benefits

Unemployment can be stressful enough without having to figure out the tax treatment of the unemployment benefits you receive. Unemployment compensation generally includes, among other forms, state unemployment compensation benefits, but the tax implications depend on the type of program paying the benefits. You must report unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ.  

Here are four tips from the IRS about unemployment benefits:

• You must include all unemployment compensation you receive in your total income for the year. You should receive a Form 1099-G, with the total unemployment compensation paid to you shown in box 1.
• Other types of unemployment benefits include,  benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund, railroad unemployment compensation benefits, disability payments from a government program paid as a substitute for unemployment compensation, trade readjustment allowances under the Trade Act of 1974, unemployment assistance under the Disaster Relief and Emergency Assistance Act. For complete information on each of the benefits listed, see chapter 12 in IRS Publication 17, Your Federal Income Tax, or Publication 525, Taxable and Nontaxable Income.
• You must report benefits paid to you as an unemployed member of a union from regular union dues. However, if you contribute to a special union fund and your payments to the fund are not deductible, you only need to include in your income the unemployment benefits that exceed the amount of your contributions.
• You can choose to have federal income tax withheld from your unemployment compensation. To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. Tax will be withheld at 10 percent of your payment. If you choose not to have tax withheld, you may have to make estimated tax payments throughout the year.

For more information on unemployment compensation see IRS Publications 17 and 525.  Forms and publications can be downloaded from the IRS Website at www.irs.gov or can be ordered by calling 1-800-829-3676 

10 Things to Know about Free IRS Tax Help

Millions of taxpayers qualify for free tax preparation assistance from IRS-sponsored community-based, volunteer programs.  Here are 10 things the IRS wants you to know about these volunteer programs.

• The IRS sponsors both the Volunteer Income Tax Assistance (VITA) and the Tax Counseling for the Elderly (TCE) programs.
• The IRS VITA program offers free tax help to people who earn less than $50,000. Most locations offer free electronic filing.
• The TCE program offers free tax help to people who are age 60 or older.
• The IRS certifies community volunteers so they can help eligible persons with tax credits, such as the Earned Income Tax Credit, the Child Tax Credit and the Credit for the Elderly.
• Some volunteer sites have language specialists to assist people with limited English proficiency.
• More than 12,000 free tax preparation sites are open nationwide this year as the IRS continues to expand its partnerships with nonprofit and community organizations performing these vital tax preparation services.
• As part of the TCE program, AARP operates the Tax-Aide free tax preparation program during the filing season. Trained and certified AARP Tax-Aide volunteers help taxpayers with low-to-moderate income, with special attention paid to those 60 and older.
• IRS partners with the military to provide free tax assistance to military personnel and their families. The Armed Forces Tax Council consists of the tax program coordinators for the Army, Air Force, Navy, Marine Corps and Coast Guard. Volunteers are trained and equipped to address military-specific tax issues, such as combat zone tax benefits.
• Taxpayers can typically find locations and hours for these volunteer tax preparation services through city information hotlines and local community organizations.

Local VITA site information is also available through a new online tool on the IRS Website - www.irs.gov  Taxpayers can search the word “VITA” in IRS.gov and click on the option “Free Tax Return Preparation For You by Volunteers,” followed by ”Find a VITA site near you” to access the tool. Site information is also available by calling the IRS toll-free number 1-800-906-9887. To locate the nearest AARP Tax-Aide site, visit www.aarp.org or call 1-888-227-7669.