This is the time of the year when millions of Americans are beginning to focus their time and energy on preparing their tax returns. Since 2008 the President and the U.S. Congress have passed many, many tax law changes that could affect you and provide opportunities for you to pay less in Federal taxes and keep more of your hard-earned income. If you haven’t had an opportunity to do so yet, go the following link on this website: http://www.billseabrookecpa.com/resources/2009taxreturnquestionnaire.doc  and look through pages six through nine of that document. It provides a brief summary for many of these tax law changes. If you are in doubt, contact your tax prepararer or call the IRS at (800) 829-1040 or go to the IRS website (http://www.irs.gov) and perform a search of that website for the information that you need. The IRS website also provides publications, forms, and instructions which are available in Acrobat Reader (downloadable) format.
In the past several years far too many Americans have lost their jobs and have received unemployment benefits. For tax year 2008 and all previous years 100% of these benefits were taxable as wages and income. In 2009 a change to the tax laws provides that for 2009 up to $2,400.00 in Federal or state unemployment benefits are excludeable from the income of every American taxpayer. Married taxpayers who are filing a joint return will each receive the same exclusion amount. However, supplement unemployment benefits from the fund of a former employer are not eligible for this exclusion.Â
Please notice in the IRS bulletin below that there is a special manual computation adjustment that is required by the taxpayer:
“You must subtract $2,400 from the amount in box 1 of Form 1099-G to figure how much of your unemployment compensation is taxable and must be reported on your federal tax return. Do not enter less than zero. “ (Note: The IRS will also already have a copy of your 2009 1099-G in their files when they receive your 2009 tax return). For taxpayers who live in states having a state income tax, check the state requirements to confirm that your state is following these same Federal guidelines. (more…)