If you’re recently unemployed, you may not be aware of some of the tax breaks and benefits you may be eligible for. All of these tax breaks and benefits are a direct result of the American Reinvestment and Recovery Act (ARRA) enacted in February of this year.
The good news is that these benefits are across the board. That means that no matter what state you’re in, you can benefit from these tax breaks and benefits immediately, as soon as you apply for unemployment.
Individuals currently receiving unemployment saw a $25 a week increase in the amount of their unemployment benefits. That means that being unemployed this year means $100 a month more than being unemployed last year. Think that’s chump change? For a family of four, that’s a week’s worth of groceries.
It’s also important to note that the first $2,400 you receive in unemployment benefits is now tax free. This means you pay no income tax on the first $2,400 you receive in unemployment! Just remember that the remainder is taxable.
Unemployment benefits have also been extended. If your unemployment is due to expire, ask for an extension. Extensions of up to 33 weeks (instead of 26) are available, depending on your state. But in most states, you MUST apply for the extension. It doesn’t happen automatically.
ARRA also provides up to 9 months of subsidized COBRA coverage for those unemployed due to the recession who lose their health insurance. This means that the government will pay 65% of the costs of your monthly COBRA payments. You will only be responsible for paying the remaining 35%. This is especially important for families with young children or for those with chronic medical conditions.
And even though you may not immediately see money in your pocket with this provision, ARRA has also provided additional funding for employment services programs to help unemployed workers find jobs.
Employers are also offered tax credits of up to $2,400 per employee to encourage the hiring of unemployed veterans and “disconnected youth” in addition to the types of employees whose hiring qualifies their employer for this credit.
Times are tough, but tax breaks and benefits like these can help soften the hardship.
This entry was posted on Thursday, September 3rd, 2009 at 10:42 AM and is filed under Tax News. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.
