by Harrine Freeman
Unemployment insurance benefits are taxable for federal and state. Seven states fully exempt unemployment benefits: Montana, New Jersey, Alabama, Pennsylvania, Arkansas, California, and Virginia. Wisconsin and Indiana offer partially exempt unemployment benefits.
You will receive a Form 1099-G that will show your total unemployment compensation and the amount of taxes withheld. Here are 5 options if you owe taxes and are unemployed.
1. Installment. Apply for an installment plan and setup an IRS payment schedule by filing IRS Form 1127. If you can pay the amount owed in 3 years.
2. Extend. Request an IRS extension for 6 months.
3. Pay. Pay at least something. Interest is charged on unpaid taxes from Tax Day (April 15th) until the day you make the final payment.
4. Streamline agreement. If you own less than $25,000 and can pay the amount within six years, ask the IRS for a streamlined payment agreement.
5. Offer in Compromise. Request an Offer in Compromise if you cannot pay the total amount owed which allows you to settle your tax debt for a smaller amount.
Here are some helpful links regarding personal finance: http://www.hefreemanenterprises.com/resources.html
About the Author
Harrine Freeman is a credit repair expert and CEO of H.E. Freeman Enterprises, a credit repair and personal finance services company. She provides personal consultations to teach consumers how to get out of debt and learn how to manage their finances. She also provides debt management workshops for schools, churches and organizations. Read more at: http://www.hefreemanenterprises.com
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