Unemployment Benefits and The American Recovery and Reinvestment Act of 2009

Taxpayers who received unemployment benefits in 2009 are entitled to a special tax break when they file their 2009 federal tax returns as part of the American Recovery and Reinvestment Act of 2009.  

Here are five important facts you should know about your unemployment benefits:

• Unemployment compensation typically includes state unemployment insurance benefits, railroad unemployment compensation benefits and benefits paid by a state or the District of Columbia from the Federal Unemployment Trust fund.  It does not include workers compensation.  
• Under the Recovery Act the first $2,400 of unemployment benefits are excluded from taxable income.
• If you filed Married Filing Jointly each taxpayer on the return is eligible for the exclusion.   Single = $2,400 and Married Filing Jointly = $4,800
• Box 1 of the 1099G shows total unemployment compensation paid in 2009
• Subtract $2,400 from Box 1 to figure the taxable unemployment compensation amount reportable on your tax return

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