$2400 of Unemployment Benefits in 2009 Not Subject to Federal Income Tax

Are unemployment benefits taxable?

Yes. However, the Economic Stimulus package provides that $2400 of unemployment benefit payments you receive in calendar year 2009 (to be reported on the tax return you file in 2010) will not be subject to federal income tax. This applies to all unemployment benefit payments – regular and EUC benefits.

Will federal income tax be withheld from my unemployment benefit payments?

You are given that choice when you complete an application for unemployment benefits. You can change your request for withholding online or by using the automated phone option.

Online instructions:

• Log in to your account.
• On your home page, click on View and Maintain My Account
• Click on Tax Withholding Information