18663 Ventura Blvd, Suite 227Tarzana, CA 91356
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18663 Ventura Blvd, Suite 227Tarzana, CA 91356
FREE CONSULTATION818-436-2775
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Personal, Affordable Payroll Services, Bookkeeping, and Tax Processing for Small Business throughout Los Angeles County.

Understanding Unemployment Taxes

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Collecting unemployment can be just the thing you need to keep food on the table, a roof over your head and bill collectors at bay when you lose your job. If you’ve never been on unemployment before, it’s worth knowing that the IRS can take taxes out of your unemployment checks just like they do with your regular employment checks. Sitting down with a professional who specializes in accounting payroll taxes is a great way to learn more about unemployment deductions.

Adding Insult to Injury

There’s simply no escaping the reach of the IRS, no matter what kind of job you have or how unemployed you are. For example, if your unemployment benefits for the year total $40,000, don’t be surprised when you only collect $30,000. The IRS will hold on to $10,000 until the end of the year when you file your taxes.

In the past there was no way for an unemployed individual to recoup the money that the IRS withheld from their unemployment funds. While it was possible to hold out hope for a refund after filing a tax return, someone with a strong grasp of accounting payroll taxes will tell you that individuals who are high earners and don’t have dependants or a mortgage can quickly lose a majority of their unemployment check.

Changing Times

The IRS now allows you to deduct as much as $2,400 from your taxable income calculations. While this isn’t very much at all, it’s a lot better than nothing. Not only that, but if you are someone who is at the low spectrum of your tax bracket, it gives you the opportunity to shift to a bracket where you aren’t taxed as much.

Plan Ahead

If you live in a state where taxes aren’t withheld from unemployment checks, it will be in your best interest to set aside some money from your checks so that you won’t go into shock when you see that you owe money at the end of the tax year.

If you recently started collecting unemployment, reach out to a specialist in accounting payroll taxes so that you and your finances will be prepared for the deductions or lack of deductions this tax season.