Taxable Income

Q: Is unemployment compensation considered taxable income?

Unemployment compensation is includible in gross income. You must report unemployment compensation on line 19 of Form 1040, line 13 of Form 1040A, or line 3 of Form 1040EZ. However, for 2009, the first $2,400 of unemployment compensation is excluded from income and should be excluded from the amount reported on your tax return.

If you received unemployment compensation during the year, you should receive Form 1099-G (PDF) showing the amount you were paid. Any unemployment compensation received during the year must be included in your income, unless you contributed to the fund. See Below. In addition, for 2009, the first $2,400 of unemployment compensation is excluded from gross income.

If you received unemployment compensation, you may be required to make quarterly estimated tax payments. However, you can choose to have federal income tax withheld. For more information, refer to Form W-4V (PDF), Voluntary Withholding Request.

Q: I retired last year, and started receiving social security payments. Do I have to pay taxes on my Social Security benefits?

Social Security benefits include monthly retirement, survivor, and disability benefits. They do not include supplemental security income (SSI) payments, which are not taxable. The amount of social security benefits that must be included on your income tax return and used to calculate your income tax liability depends on the total amount of your income and benefits for the taxable year.

To find out whether any of your benefits may be taxable, compare the base amount for your filing status with the total of half of your benefits and all of your other income, including tax-exempt interest. The base amount for your filing status is shown next:

  • $25,000 if you are single, head of household, qualifying widow(er) or married filing separately living apart from your spouse at any time during the tax year.
  • $32,000 if you are married filing jointly.
  • $-0- if you are married filing separately living with your spouse at any time during the tax year.

Q: Are Social Security survivor benefits for children considered taxable income?

The person who has the legal right to receive the benefits must determine whether the benefits are taxable. If you and your child receive benefits, but the check for your child is made out in your name, you will use only your part of the benefits to see whether any benefits are taxable to you. The amount of income tax that your child must pay on that part of the benefits that belong to your child depends on the total amount of income and benefits for the taxable year.