Valley Works: Taxing Unemployment checks

March 25, 2013 12:00:00 AM PDT
The average unemployment check in California is less than $300.00 a week.

Because it doesn't seem like a lot, many of the unemployed assume they won't owe Uncle Sam.

In California, the state doesn't withhold taxes from your unemployment benefits but that doesn't mean you don't have to file a tax return and in some cases you may even owe.

Most of those who came here to have their taxes prepared by these group of volunteers are hoping they will not owe the government any money, it's an expense they just couldn't afford.

For the unemployed the idea of having to pay taxes on the benefits they receive may seem unreasonable; in fact, California doesn't tax those benefits, but it's a different story when it comes to the federal government.

Accountant James Aleru says whether or not you have to pay taxes depends on just how much your total income is. He says a good way to measure your liability is to add up your standard deduction and individual exemption.

James Aleru said, "If you have income that is equal to those two numbers not subject to any tax liability."

But you could end up owing taxes if you worked part of the year you were unemployed or have other sources of income such as wages from your spouse's job. If you tapped into your 401K expect to be hit with taxes as well. That's why it's important to take advantage of any deductions available to you, including job hunting expenses.

Aleru said, "Agency fees, travel expenses, meals transportation."

Aleru says keep in mind, if all of your expenses are less than two percent of your adjusted gross income, it's probably not worth itemizing.

"That is the limitation most low income people have because they don't have the income high enough or the itemized deduction high enough to itemize," said Aleru.

But even if you believe you didn't make enough money to itemize, many of the low income do qualify for a very important tax credit.

VITA Site Coordinator David lopez said, "A big thing that we do is earned income tax credit, a ton of people get that. That is the number one deduction people get and in addition they get the child tax credit. If they have children, they can claim head of household and get the child tax credit as well."

If you make less than $50 thousand a year you can take advantage of the free service offered by the Volunteer Income Tax Assistance Program, known as VITA. You can get more information from the United Way of Fresno County.


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