• July 20, 2016
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Unemployment benefits were first introduced in the U.K. in the year 1911. Two decades later, in the year 1932, the Unemployment benefits scheme was introduced in the US, in Wisconsin. The federal government of the U.S, then, through its Social Security Act of 1935, encouraged states to adopt and implement unemployment insurance schemes for the welfare of people. Since then, though there have been countless debates on whether the government should be paying these benefits, the U.S. government has continued to set-off a significant sum from its treasury as unemployment benefits for its citizens. However, without getting into that debate, let us go through a few must know facts about unemployment benefits.

1. Unemployment compensation is taxable

The compensation you received during the tax year when you were unemployed is subject to taxes. To help you file your taxes you would receive Form 1099-G, also called “Certain Government Payments”, containing information about the compensation the Government made to you and the taxes it withheld. You should receive the form by 31th Jan of any financial year during which you were unemployed.

2. The compensation is paid under U.S. or State Law

The unemployment compensation that you receive is paid to you under the U.S. or State unemployment compensation laws. If you wish to know more about unemployment compensation, you may refer to Publication 525, Taxable and Nontaxable Income, or speak with one our IRS tax experts.

3.  Any Union benefits you receive may be taxable

If you received any Union benefits as an unemployed member of a Union, it is taxable and you need to show it in your income. However, you can exclude these benefits from your income to the extent of the contribution you made to a special union fund (where the contributions made were not deductible from your income).

4. You may have tax withheld

If you received unemployment compensation and are liable to ‘pay taxes’ on it, you must use Form W-4V (Voluntary Withholding Request) to have your federal income tax withheld. If you do not choose to get the taxes withheld, you will have to pay the taxes on your own.

5. Seek help from IRS.gov

If you are facing any financial difficulties and are unable to pay your taxes, you may visit IRS.gov for help. There you would find a page “The ‘What Ifs’ for Struggling Taxpayers”. It will help you understand the tax impacts and what needs to be done under some of the “what if” scenarios. The IRS would try its best to help you out of the situation.

Last Few Words

During the period when you are unemployed you may not be in a position to pay your taxes. Under such circumstances, you must contact the IRS and file your returns to avoid penalties, even if you are unable to make the payment. Alternately, you may also get in touch with one of our tax attorneys at The Law Offices of Nick Nemeth and we will be happy to help. You can reach us at (972) 426-2553.

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What Our Clients Have to Say

Susan WilsonSusan Wilson
03:27 25 Jan 23
I have been very pleased with the solid counsel and guidance that Nick Nemeth has provided me regarding my tax issue. I found him to be honest and straightforward which I appreciated. I was impressed with his relevant experience and knowledge . He has definitely brought me peace of mind during a difficult and stressful time.
Sarah HowardSarah Howard
03:44 14 Nov 22
I would like to thank Mr. Nick and his staff for the superb help that I received from them. My IRS problem was resolved quickly and efficiently. It took 2 visits to convince me that I was over my head. I thought that I could call the IRS, appeal my tax notices and settle on a payment plan on my own. After many phone calls to the IRS, waiting sometimes more than 4 hours with no resolution to speak of, it proved to be extremely difficult and stressful. Revisiting Mr. Nick was a huge wake up call. My account was reviewed, and a payment plan was established with the IRS within a week. I will be forever grateful to the staff who worked on my case and especially to Lorna who listened to me vent while going through this painful process.
00:33 07 Aug 22
I cannot say enough good things about Nick and his team. When I first met with Nick he was up front, honest, friendly and efficient. When I worked with one of his attorneys, Eric B, I was just as pleased. All of the staff there are nice and very helpful. I wish I hadn't waited so long to get help with my issue. Over 6yrs I tried getting through and getting anywhere with the IRS and hardly made any progress. I know this may not be the case for all, and even I thought it would take longer than it did, but 3mos and they had my situation straightened out. I still can't believe it. Thank you thank you THANK YOU for all that you did for me. This is a huge burden gone out of my life now thanks to you. If anyone needs help out there, I know you may not want to shell out more money to get their help but it may just save you in the long run.
Spoilly GirlSpoilly Girl
23:49 03 Aug 22
The Nemeth Law team is exceptional. They treat their clients like a family member who is in crisis. They want you to get the best possible outcome. I really appreciate everything that they did for me. Jake and Ashley had the greatest role in my case and it all turned out for the best for me. Thank you Nick and team for easing my fears and getting me through the long process. I'm truly grateful.
Eddie WaltEddie Walt
19:44 12 Jul 22
During a time in which competent, professional service at a fair price seems to have disappeared, Mr. Nemeth and his team are a refreshing breath of fresh air.From my first phone call to the final settlement of our case with a non-responsive IRS, they under-promised, over-delivered and were in constant courteous contact to make sure we knew exactly what was happening and where we stood.I hope to never need their services again, but, should I receive another friendly letter from the IRS...I know who to call!
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