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Question about taxes on unemployment income?
I am a single mother with one child. I always file Head of Household and get a refund (never make over 29K a year). My tax liability has always been minimal and EIC and Child Tax Credit has always more than covered it. However, this year, for the first time ever, I had to go on unemployment. My total unemployment income for the year is 5,000. I have not had taxes withheld from my unemployment checks because it's hard enough to pay the bills with just over $200 a week without the goverment taking a chunk of it too. My question is: is there a special tax rate on unemployment income, or will it be treated like any other? I'm assuming since it isn't "earned" income, it does not count towards my income for EIC. My hope is that between the standard deduction, EIC, and child tax credit my tax liability will still be minimal and the credits will cover it.
10 Answers
- LynneLv 69 years agoFavorite Answer
I think you have the right ideas.
It is just treated as regular income without a special tax rate.
It does not qualify you for EIC , though it can factor into the EIC calculation if you do have other earned income.
At $200 a week, your standard deduction, exemptions, and child tax credit will likely eliminate any tax liability. However, without knowing your full income information, I can not give a more reliable opinion.
- Anonymous5 years ago
On the federal return, the full amount of the unemployment will be taxable just as your husband's earned income is. If your children are under 17, you can use the child tax credit to bring the tax bill down to zero. Whether anything is left for the additional child tax credit depends on what your husband's earned income is. EIC is a mystery item. EIC is calculated twice. Once with just your husband's earned income and a second time with the AGI. Whichever calculation comes up smaller is the one you'd get. Edit, don't worry about not having tax withheld. You don't actually owe any based on these numbers. And no, you can't file MFS.
- JudyLv 79 years ago
How much did you earn, outside of the unemployment? The earnings WILL count toward EIC, so depending on the total amount, you'll likely be OK.
Federal tax rate on unemployment is the same as other income except they don't take out social security or medicare. And some states don't tax unemployment.
- 9 years ago
Go to www.TaxCalculator.org and do the following:
1) Select "Head of Household"
2) Enter 5000 in the box "Unemployment Compensation" under the Income tab.
3) Enter 1 as number of dependents
One the right it will show you standard deductions and exemptions you are eligible for.
In your case you standard deductions alone (8700) will cover you income
Overall, unemployment income is treat as a regular income for tax purposes.
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- SlickterpLv 79 years ago
Taxed as regular income. You are correct, not earned income and does not count to EIC.
YOu are probably correct that your credits will cover it assuming you normally get a refund.
- BobbieLv 79 years ago
No special tax rate on the unemployment that you did receive during the 2012 tax year.
So you received unemployment for about 25 week during the 2012 tax year RIGHT.
How much is going to reported on your W-2 in the Box 1 Gross wages earnings and in the Box 2 FIT amounts withheld during the tax year 2012 for this purpose.
One half of 29000 would be 14500 might be your possible GROSS wages in the Box 1 of your W-2 form for the 2012 tax year RIGHT.
If you can figure out how to use the below enclosed information at this time in your life you should be able to come up with your own estimated taxes that you might end up with during the 2013 tax filing season or may be even a REFUND amount IF you have all of your income information available to you from your last pay check stub that should have had your year to date taxes that your employer might have withheld from your GROSS earnings during the 2012 tax year at that time.
Here you go you can try and do your own estimated tax calculations at this time in your life for this purpose since you are the only one that would know all of the needed necessary information at this time.
www.irs.gov website and use the search box for 2012 Form 1040-ES (OTC)
Estimated Tax for Individuals
http://www.irs.gov/pub/irs-pdf/f1040es.pdf?portlet...
Copy and paste the below enclosed website address into your browser address bar for this purpose.
http://www.dinkytown.net/java/Tax1040.html
Enter your filing status, income, deductions and credits and we will estimate your total taxes for 2012. Based on your projected withholdings for the year, we can also estimate your tax refund or amount you may owe the IRS next April 2013.
In 2011, Federal income tax rates were scheduled to increase to pre-2001 levels, but the "Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010" left the existing tax brackets in place through 2012.
You probably can find an estimated tax calculator for your state income taxes by going to your state income tax department website and use the search box for estimated tax calculator at that time in your life.
My Guesstimate using what little information that you have included above for this purpose.
Total income $19,500
Adjusted gross income (AGI) $19,500
Standard deduction $8,700
Deduction for exemptions $7,600
Taxable income $3,200
Federal income tax liability at this point would be Tax* $320
1040 page 2 line 44 320 FIT liability amount before any possible tax credits that you might be able to qualify for when you do correctly complete your 1040 income tax return during the tax filing season for this purpose.
You are the only one that knows the age of your child for this purpose at this time in your life RIGHT so now it is your turn go for it and Good Luck to you.
I would hope that you do find the above enclosed information useful for your situation and good luck to you with this matter. 08/23/2012
- troLv 79 years ago
no there is no special rate for unemployment, it is income like the other income you have without taxes withheld unless you requested income taxes to be withheld
you will probably get less refund this year than other years
your non taxable income for hoh with one child is $16300
- Max HooplaLv 79 years ago
Unemployment is ordinary income but at your level the tax due will be zero.
- ?Lv 79 years ago
sorry this is a major mistake of folks on
unemployment .
there is no "special tax rate" just your
standard. matter of fact u may have to
pay extra cause u did not have it with held.
visit library for books on taxes and study them.
good knowledge is good luck.
Source(s): employer