Question: Hello Ralph, I was wondering if Unemployment Benefits are taxable?
Answer: What a great question and very relevant in these times of high unemployment. Yes they are taxable as ordinary income. In 2009, the IRS allowed you to exclude $2400 from tax, but that was only for that tax year. You must include all unemployment benefits on your tax return. Many states, such as Delaware, allow you to voluntarily elect to have federal income taxes withheld from your benefits.
For more answers to your tax questions and for ideas to improve the bottom line, contact Saggio Accounting+PLUS and Ralph V. Estep, Jr. Call today and book for your tax season appointment. Join us at www.askralph.com or call 302-659-6560.