Tuesday, July 27, 2010

How should I received Income from Un-employment Compensation?

Un-employment Compensation:

Unemployment compensation generally includes any amounts received under the unemployment compensation laws of the United States or of a state. It includes state unemployment insurance benefits and benefits paid to you by a state or the District of Columbia from the Federal Unemployment Trust Fund. It also includes railroad unemployment compensation benefits and disability benefits paid as a substitute for unemployment compensation, but not worker's compensation.

Supplemental unemployment benefits received from a company financed fund are not considered unemployment compensation for this purpose. These benefits are taxable as wages, and are subject to income tax withholding. They may be subject to social security and medicare. Supplemental unemployment benefits are reported on Form W-2.

Unemployment benefits from a private fund to which you voluntarily contribute are taxable only if the amounts you receive are more than your total payments into the fund. This taxable amount is not unemployment compensation; it is reported as other income on Form 1040.

If you received unemployment compensation during the year, you should receive Form 1099-G showing the amount you were paid. Any unemployment compensation received during the year must be included in your income.

If you received unemployment compensation, you may be required to make quarterly estimated tax payments. However, you can choose to have federal income tax withheld.

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