Top Five Tips on Unemployment Benefits

Tax tips from the IRS on unemployment benefits

If you lose your job, you may qualify for unemployment benefits. While these payments may come as a relief, it’s important to remember that they may be taxable. Here are five key facts about unemployment compensation:

1. Unemployment is Taxable. You must include all unemployment compensation as income for the year. You should receive a Form 1099-G, Certain Government Payments by Jan. 31 of the following year. This form will show the amount paid to you and the amount of any federal income tax withheld.

2. Paid Under U.S. or State Law. There are various types of unemployment compensation. Unemployment includes amounts paid under U.S. or state unemployment compensation laws. For more information, seePublication 525, Taxable and Nontaxable Income.

3. Union Benefits May be Taxable. You must include benefits paid to you from regular union dues in your income. Other rules may apply if you contributed to a special union fund and your contributions to the fund are not deductible. In that case, you only include as income any amount that you got that was more than the contributions you made.

4. You May have Tax Withheld. You can choose to have federal income tax withheld from your unemployment. You can have this done using Form W-4V, Voluntary Withholding Request. If you choose not to have tax withheld, you may need to make estimated tax payments during the year.

5. Visit IRS.gov for Help. If you’re facing financial difficulties, you should visit the IRS.gov page: “What Ifs” for Struggling Taxpayers. This page explains the tax effect of events such as job loss. For example, if your income decreased, you may be eligible for certain tax credits, like the Earned Income Tax Credit. If you owe federal taxes and can’t pay your bill check the Payments tab on IRS.gov to review your options. In many cases, the IRS can take steps to help ease your financial burden.

For more details visit IRS.gov and check Publication 525. You can view, download and print Form W-4V at IRS.gov/forms anytime.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

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Tax Tips to Help You Determine if your Gift is Taxable

As the tax deadline approaches the tips increase! Here’s one on determining if your gift is subject to gift tax.

If you gave money or property to someone as a gift, you may wonder about the federal gift tax. Many gifts are not subject to the gift tax. Here are seven tax tips for gifts and the gift tax.

1. Nontaxable Gifts. The general rule is that any gift is a taxable gift. However, there are exceptions to this rule. The following are nontaxable gifts:

  • Gifts that do not exceed the annual exclusion for the calendar year,
  • Tuition or medical expenses you paid directly to a medical or educational institution for someone,
  • Gifts to your spouse
  • Gifts to a political organization for its use, and
  • Gifts to charities.

2. Annual Exclusion. For 2015, the annual exclusion is $14,000. Most gifts are not subject to the gift tax. For example, there is usually no tax if you make a gift to your spouse or to a charity. If you give a gift to someone else, the gift tax usually does not apply until the value of the gift exceeds the annual exclusion for the year.

3. No Tax on Recipient. Generally, the person who receives your gift will not have to pay taxes on it.

4. Gifts Not Deductible. Making a gift does not ordinarily affect your taxes. You cannot deduct the value of gifts you make (other than deductible charitable contributions).

5. Forgiven Debt and Certain Loans. The gift tax may also apply when you forgive a debt or give a loan that is interest-free or below the market interest rate.

6. Gift-Splitting. You and your spouse can give a gift up to $28,000 to a third party without making it a taxable gift. You can consider that one-half of the gift be given by you and one-half by your spouse.

7. Filing Requirement. You must file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, if any of the following apply:

  • You gave gifts to at least one person (other than your spouse) that amount to more   than the annual exclusion for the year.
  • You and your spouse are splitting a gift. This is true even if half of the split gift is less than the annual exclusion.
  • You gave someone (other than your spouse) a gift of a future interest that they can’t actually possess, enjoy, or from which they’ll receive income later.
  • You gave your spouse an interest in property that will terminate due to a future event.

For more information, see Publication 559, Survivors, Executors, and Administrators. You can view, download and print tax products on IRS.gov/formsanytime.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

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IRS Offers 10 Tax-Time Tips

The April 18 deadline to file your federal tax return is less than two weeks away. Don’t wait until the last minute. If you haven’t filed yet, the IRS has these 10 tax-time tips to help you.

1. Gather your records.  Make sure you have all your tax records. This includes receipts, canceled checks and other records that support income, deductions or tax credits that you claim. If you purchased health insurance through the Marketplace, you will need the information in Form 1095-A to file.

2. Report all your income. You will need to report your income from all of your Forms W-2, Wage and Tax Statements, Forms 1099 and any other income – even if you don’t receive a statement – when you file your tax return.

3. Try IRS Free File. Free File is available only on IRS.gov. If you made $62,000 or less, you can use free name-brand tax software to file your federal tax return. If you earned more, you can use Free File Fillable Forms, an electronic version of IRS paper forms. If you need more time to file, you can also use IRS Free File to get an automatic six-month extension to file your taxes. Remember, an extension to file your tax return is not an extension to pay taxes you owe, which are due April 18.

4. Try IRS e-file. Electronic filing is the best way to file a tax return. It’s accurate, safe and easy. If you owe taxes, you have the option to e-file early and pay by April 18 to avoid penalties and interest.

5. Use Direct Deposit.  The fastest and safest way to get your refund is to combine e-file with direct deposit. The IRS issues more than nine out of 10 refunds in less than 21 days.

6. Visit IRS.gov. IRS.gov is a great place to get what you need to file your tax return. Click on the “Filing” icon for links to filing tips, answers to frequently asked questions and IRS forms and publications. Get them all at any time. The IRS Services Guide outlines the many ways to get help on IRS.gov.

7. Use IRS online tools. The IRS has many online tools on IRS.gov to help you file. For instance, the Interactive Tax Assistant tool provides answers to many of your tax questions. The tool gives the same answers that an IRS representative would give over the phone. If you want to find a tax preparer with the qualifications and credentials that you prefer, use the IRS Directory of Federal Tax Return Preparers. IRS tools are free and easy to use. They are also available 24/7.

8. Weigh your filing options. You have different options for filing your tax return. You can prepare it yourself or go to a tax preparer. You may be eligible for free help at a Volunteer Income Tax Assistance or Tax Counseling for the Elderly site.

9. Check out number 17. IRS Publication 17, Your Federal Income Tax, is a complete tax resource that you can read on IRS.gov. It’s also available as an eBook. It can help you with many tax questions, such as whether you need to file a tax return, or how to choose your filing status.

10. Review your return.  Mistakes slow down your tax refund. If you file a paper return, be sure to check all Social Security numbers. That’s one of the most common errors. Remember that IRS e-file is the most accurate way to file.

Each and every taxpayer has a set of fundamental rights they should be aware of when dealing with the IRS. These are your Taxpayer Bill of Rights. Explore your rights and our obligations to protect them on IRS.gov.

Additional IRS Resources:

IRS YouTube Videos:

IRS Podcasts:

  • Interactive Tax AssistantEnglish

Here’s What You Need to Do with Your Form 1095-B

 

Form 1095-B, Health Coverage, provides you with information about your health care coverage if you, your spouse or your dependents enrolled in coverage through an insurance provider or self-insured employer last year.

Here are the answers to questions you’re asking about Form 1095-B:

Will I get a Form 1095-B?

  • You will receive Form 1095-B – which is a new form this year – from your insurance provider if you had insurance for you or your family members.
  • The term “health insurance providers” includes insurance companies, some self-insured employers, and government agencies that run Medicare, Medicaid or CHIP.
  • You are likely to get more than one form if:
    • You had coverage from more than one provider
    • You changed coverage or employers during the year
    • If different members of your family received coverage from different providers

How do I use the information on my Form 1095-B?

  • This form provides information about your health coverage, including who was covered, and when the coverage was in effect.
  • If Form 1095-B, Part IV, Column (d), shows coverage for you and everyone in your family for the entire year, you can simply check the full-year coverage box on your tax return.
  • If you did not have coverage for the entire year, use Form 1095-B, Part IV, Column (e), to determine the months when you or your family members had coverage. If there were months that you did not have coverage, you should determine if you qualify for an exemption from the requirement to have coverage. If not, you must make an individual shared responsibility payment.
  • You are not required to file a tax return solely because you received a Form 1095-B if you are otherwise not required to file a tax return.
  • Do not attach Form 1095-B to your tax return – keep it with your tax records.

What if I don’t get my Form 1095-B?

  • You might not receive a Form 1095-B by the time you are ready to file your 2015 tax return, and it is not necessary to wait for it to file.
  • The information on these forms may assist in preparing a return, and you, however you can prepare and file your return using other information about your health insurance.
  • The IRS does not issue and cannot provide you with your Form 1095-B. For questions about your Form 1095-B, contact the coverage provider. See line 18 of the Form 1095-B for a contact number.

Depending upon your circumstances, you might also receive Forms 1095-A and1095-C. For information on these forms, see our Questions and Answers about Health Care Information Forms for Individuals.