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Q&A: Confused about the new unemployment tax break? We answer your questions

David Lightman, The Sacramento Bee on

Published in Home and Consumer News

WASHINGTON — Here’s the easy part: If your modified adjusted gross income is less than $150,000, you don’t have to pay federal income tax on the first $10,200 in unemployment benefits you got last year.

But like anything else involving taxes, there are difficult parts to all this.

What if both you and your spouse got unemployment payments? What sort of tax do you have to pay if your income goes above the limit? And how do you explain all this to the government on the tax form?

With the help of Perry Ghilarducci, a certified public accountant in Sacramento, the California Employment Development Department media staff and the Internal Revenue Service, we try to answer some of the questions readers have posed to us.

Here goes:

Q. How do I know how much I received in unemployment compensation last year?


A. You should have received a 1099G form from the state. If you have questions about the form, use this link and call the numbers or the contact information on the EDD site.

Q. Do I have to pay federal income tax on those benefits?

A. Yes, though you can exclude the first $10,200 of benefits if your modified adjusted gross income last year was less than $150,000.

Q. How do I know if I can exclude that amount?


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