Stimulus Plan Suspension of Federal Unemployment Tax
The economic stimulus package is going to provide some needed help for the unemployed worker. The stimulus plan suspension of federal unemployment tax will bring some relief to many.The American Recovery and Reinvestment Act of 2009 will have benefits for unemployed workers in numerous ways:
Limited Suspension of Federal income tax on unemployment benefits for 2009
Generally unemployment benefits are taxable under state and federal tax codes. In 2009 the federal tax portion of your liability will be reduced by $2,400 on benefits paid. Most states allow for the choice of having taxes taken out or not, either way you’ll be able to take the tax credit for 2009.
Extra $25.00 per week in Unemployment Benefits
Unemployment benefits will be increased for most persons receiving compensation. The stimulus plan does not allow for the extra benefit if you have earnings in a week that reduce your benefit payment to zero. In other words, if you don’t get a check for a particular week, they’re not going to give you the $25 just because.
In filing federal and state taxes in 2009 you still have to consider that out of the $2,400 you will only get total relief on $1,575. Your extra $25 per week will add $825 to your total compensation that is subject to federal and state taxes. States have not made mention of giving any kind of tax relief for the unemployed as of yet to match the fed tax credit.
Extension on Unemployment Compensation
The stimulus plan also extended the benefit weeks to 33 (Emergency Unemployment Compensation) to eligible claimants. Depending on your tax situation and how many weeks you were unemployed in 2009; your federal and state tax liability will change.
To learn more about the 2009 Economic Stimulus Package, visit TurboTax Online. They have the latest information to help you benefit from this plan.
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