Phoenix Indian Community - PhoenixIndian.com
| | |
 


 

The Tax Consequences of Losing your Job

Money
Contributed by : Mukesh Makker

Share With Your Friends

Add To My Favorite
If you've lost your job you may have questions surrounding unemployment compensation, severance, and other issues that could affect your tax situation. Here are some answers:

Q: What if I receive unemployment compensation?

A:Unemployment compensation you receive under the unemployment compensation laws of the United States or of a state is considered taxable income and must be reported on your federal tax return. If you received unemployment compensation, you will receive Form 1099-G, Certain Government Payments (Info Copy Only), showing the amount you were paid and any federal income tax you elected to have withheld.

Types of unemployment benefits include:

Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund
Railroad unemployment compensation benefits
Disability payments from a government program paid as a substitute for unemployment compensation
Trade readjustment allowances under the Trade Act of 1974
Unemployment assistance under the Disaster Relief and Emergency Assistance Act
You must also include benefits from regular union dues paid to you as an unemployed member of a union in your income. However, other rules apply if you contribute to a special union fund and your contributions are not deductible. If this applies to you, only include in income the amount you received from the fund that is more than your contributions.

Q: Can I have federal income tax withheld?

Yes, you can choose to have federal income tax withheld from your unemployment benefits by filling out Form W-4V, Voluntary Withholding Request. If you complete the form and give it to the paying office, they will withhold tax at 10 percent of your payments. If you choose not to have tax withheld, you may have to make estimated tax payments throughout the year and you may owe tax when you file your tax return in April.
Q: What if I lost my job?

A: The loss of a job may create new tax issues. Severance pay and unemployment compensation are taxable. Payments for any accumulated vacation or sick time are also taxable. You should ensure that enough taxes are withheld from these payments or make estimated tax payments to avoid a big bill at tax time. Public assistance and SNAP (formerly known as food stamps) are not taxable.

Q: What if I searched for a job?

A: Under tax reform, many miscellaneous deductions were eliminated. As such, for tax years 2018-2025, you are no longer able to deduct certain expenses such as travel, resume preparation, and outplacement agency fees incurred while looking for a new job. In prior years, job-seekers were able to deduct these expense-even if they did not get a new job. Moving costs for a new job at least 50 miles away from your home were also deductible; but again, under tax reform, and for tax years 2018-2025, job-related moving expenses are not deductible.

Q: What if my employer went out of business or into bankruptcy?

A: Your employer must provide you with a Form W-2 showing your wages and withholding by January 31. You should keep up-to-date records or pay stubs until you receive your Form W-2. If your employer or its representatives fail to provide you with a Form W-2, contact the IRS. They can help by providing you with a substitute Form W-2. If your employer liquidated your 401(k) plan, you have 60 days to roll it over into another qualified retirement plan or IRA.

If you've experienced a job loss and have questions about how it affects your tax situation, help is just a phone call away.


About Author
Mr. Maker is a certified Public Accountant and serving the South Asian community since 1993.


Website: https://taxmaker.com/archive.php?archive=012019#3

 

Disclaimer: Please use this channel at your own discretion. These articles are contributed by our users. We are not responsible or liable for any problems related to the utilization of information of these articles.

 

View All Contributions

My Business:
Accounting and Tax Professionals, Inc
Bellevue

Post an Article
Notify Me of New Articles

Become A Featured Contributor
Add Your Blog | Add Recipe | Add Article

More Article by Mukesh Makker

View All Articles

Featured Contributors


Aayushi Manish

Darshan Goswami

Praveen Nair
Praveen Nair

Vasudha Sharma

Shruti Sadolkar

Ananya Kiran
Ananya Kiran

Dilip Saraf

Tahmina Watson

Anu Peshawaria
Anu Peshawaria

Latest Articles

SuperGirl Teaser launched by Choreographer Sandip Soparrkar by Staff
"Shirdi Saibaba" fame actor Aushim Khetrapal returns to acting after 18 years in "Chal Jeet Le Jahan" by Staff
War team recreates Indian Airforce Plane Gajraj by Staff
First Look Poster out "SuperGirl" Monika Chaudhary and Shaila Tike by Staff
Premier of I Killed Her Short film based on Domestic Violence by Staff
View All Articles