Taxes On Unemployment Compensation

This year, millions of Americans have faced job loss and unemployment. As so many people are struggling with a personal financial crisis, the ripple effect of a turbulent year will surely spread farther. Take, for example, those that have received financial assistance by way of unemployment compensation. For some, the upcoming tax filing season may bring unexpected challenges.

What many people do not know about unemployment compensation is that it is taxable. Yes, the money you receive through unemployment is eligible to have income taxes applied. This becomes especially problematic for people that cannot afford to owe taxes at the end of the year, as equally if not more so than those who will simply go without their accustomed tax refund.

Anyone who received unemployment compensation throughout the year will receive 1099 forms. These forms will be used to report the amount of income earned under the unemployment compensation. For individually continuing to experience financial distress, owing taxes at the end of the year will not only come as a surprise to many; but may also push them farther into debt.

Fortunately, there are solutions to help. If you anticipate receiving further unemployment income, you may want to fill out a W-4 form and submit to the EDD department to voluntarily withhold taxes for next year.  Further, if you are experiencing financial hardship, are being harassed by creditors, are worried about your owed taxes from unemployment, or are simply looking to avoid additional debt problems; contact our Houston bankruptcy attorney office today.