Many people initially think that if they collect unemployment benefits that they do not have to pay any taxes. However, it is important to understand that paying taxes, regardless of employment status is important. You can get into a great deal of trouble if you do not pay the right taxes. Do you have to pay taxes with unemployment benefits?
You will need to report the unemployment benefits as part of your annual income. If you earned money prior to going on unemployment benefits, then you are probably going to pay taxes. Depending on your tax bracket, you might actually be owed money back. Thus, another really good reason to file taxes regardless if you are receiving unemployment benefits or not.
If you’re only collecting unemployment benefits, you’re still going to need to report the money that you receive to the tax collectors. This will be calculated and figured to determine how much taxes with unemployment benefits that you need to pay the government. Unemployment benefits are not completely exempt in many states and cases for paying taxes. It would be nice if it was.
Take your unemployment benefits statements to a licensed and approved tax preparer. Give them all of your tax information. They can then give you the best advice as to whether or not you need to pay taxes with unemployment benefits.