Should I request to withhold federal income tax on my unemployment ins?

Question

Is this money that i get back when I file my taxes next year? Thanks for your help.

Lets say i dont request that any money be withheld, will I owe money instead when I file taxes?

Answer 1

Unemployment compensation is taxable income. When you file your return next year, you'll add the total u.c. that you received to any other income you have, and figure your tax on that. So yes, if you have other income and expect to owe income tax for 2007, it would be a good idea to have tax withheld from your u.c. payments - otherwise you could end up owing when your file.

If you end up overpaying, you'll get the extra back as a refund when you file.

Answer 2

Unemployment benefits are taxable income, so if there is no tax withheld, you are more likely to owe tax with your return next year. But your income will also be lower, so if you have been working and had tax withheld this year, it will have been withheld based on what you were making. It may even out, but really hard to tell without detailed information.

You can enter your estimated income and estimate what your tax liability will be if you use a program like Turbo Tax, or go to the IRS website (www.irs.gov), look up last year's tables, and get an estimate.

Answer 3

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You must include in your income all unemployment compensation you receive. You should receive a Form 1099-G, Certain Government Payments, showing the amount paid to you. Generally, you enter unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. You can choose to have federal income tax withheld from your unemployment compensation. To make this choice, complete Form W-4V, Voluntary Withholding Request, and give it to the paying office. Tax will be withheld at 10% of your payment. 0oo If you do not choose to have tax withheld from your unemployment compensation, you may be liable for estimated tax.

Answer 4

Unemployment compensation is fully taxable. Unless you're only collecting it for a week or two, you'll probably want to have taxes withheld from it. If you don't have anything withheld it's entirely possible that you will have a balance due at tax time next year.

Whether or not you get a refund depends upon your total tax liability and how much was withheld. If too much was withheld, you get a refund. If not enough was withheld, you have to pay.

Answer 5

If you don t withold 10% on your UI benefits there is no problem. You won t get charged a penalty, as long as you don t owe more than $1,000 in taxes at year end. $1,900 per month won t put you at that level of tax liability.
If you have other income from stocks or something then you may want to run the numbers in the IRS website.

Answer 6

If you do not have them with hold taxes from your unemployment checks, you will HAVE to pay that tax when you file your return at the end of the year.