KENNEWICK, Wash-- Right now all unemployment benefits are being taxed, but that could change starting next year.
When you go to file your 2009 taxes, all of, or part of, your unemployment will be tax free. It's all thanks to the American Recovery and Reinvestment Act. Now the first $2,400 you collect in unemployment will be exempt from taxes.
One tax preparer tells us a number of unemployed end up owing money to the government after they've filed their taxes. By eliminating that $2,400 from the equation, it could mean big savings for you.
"When some of these people are going on unemployment now, it can be in the 15-25% tax bracket," says Nancy Conter of Liberty Tax Service. "And you figure $2,400 taxed at 15%, that's a lot of money that they'd have to pay."
That adds up to a $360 savings. And if you're married and you're both on unemployment, you can eliminate $4,800 from your taxes.
This tax change happens this year, so it does not affect people currently filing last year's taxes.