Exempt Unemployment

[Snaggletooth]

Jim and Janiece of Akron OH both had periods of unemployment in 2009. Jim receives a 1099-G from the State of Ohio for $5100. Janiece receives one as well, hers for $2100.

When they file their tax for 2009, what is the amount of TAXABLE unemployment benefits to be included in income?

a. $2,700
b. $7,200
c. $4,800
d. $2,400
e. none of the above

A couple of comments. Firstly, I don't know the answer, although in absence of any other known factors I would say it is $4800. Secondly, before anyone can know for sure, we must know whether the amounts reported on 1099-G are the total payments or whether they have had the exemption netted out and are attempting to report only the taxable amount.

[David1980]

$2400 tax-free part is figured per taxpayer/spouse.

$2700 taxable for Jim. $0 taxable for janiece. On a MFJ return, they'll have $2700 of taxable unemployment.

The instructions for 1099-G do not indicate anything about reducing amounts reported for the new law. Only to report amounts over $10, so states should continue reporting the FULL amount paid, not just the amount over $2400.

The 1040 instructions page 27 indicate "You should receive a Form 1099-G showing in box 1 the total unemployment compensation paid to you in 2009." (emphasis mine.)

[WhiteOleander]

I agree. I understand that each t/p is entitled to the 2400 exclusion of benefits. So, I believe they would report $2700 as taxable benefits.

[Gary]

I agree

with 2700. I believe that most of the tax software will require you to enter the total unemployment and it will make the appropriate subtraction.

[FEDUKE404]

$2700

H: $5100 less $2400 = $2700
W: $2100 less $2400 = nada

Total taxable benefits: $2700

Under the American Recovery and Reinvestment Act, enacted last month, every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 of these benefits when they file their tax return next year. For a married couple, the exclusion applies to each spouse, separately. Thus, if both spouses receive unemployment benefits during 2009, each may exclude from income the first $2,400 of benefits they receive.

FE

[AJsTax]

Correct answer for

the Federal returns. How many states are going to go with the Federal exclusion or tax all of it? That alone is reason to enter the entire amount. I am sure the software adjusts to the Federal exclusion. mine did anyway when I enter my return for the first time.
I am in Ohio and still not 100% sure on the state issue. I have read over a draft of the return and did not find anywhere to bring the exempted income back in. But our wonderful state legislature did not finish the tax business until late December, so who knows???

[Gene V]

I am in Ohio and still not 100% sure on the state issue.

That’s the same for Oregon—We have a Ballot Title 66 that rises tax on household income over $250,000 (MFJ) $125,000(S) and eliminate income tax on the first $2400 unemployment. This is the result of a “YES” vote.

A “NO” vote rejects tax changes on income, however, taxes the first $2400 on unemployment. They get you either way.

The Vote takes place January 26. Best to wait until after the vote to file Oregon returns.