Tax Day is Soon!

Remember: The First $2400 is Tax Free

An unpleasant surprise awaits for many americans receiving unemployment benefits as they prepare their income tax returns this April. Unemployment benefits, as minuscule as they are, are taxable by the feds and many states.

Unemployment taxes netted $7.2 billion for the federal government in fiscal 2008 and $32.4 billion for state governments, according to the Department of Labor. But tax expert Tom Ochsenschlager said taxing unemployment is "a silly rule" whose impact on the jobless is magnified during a recession.

"Historically maybe (taxation) hasn't been a huge disadvantage for families," said Ochsenschlager, vice president of tax for the American Institute of Certified Public Accountants. Taxing unemployment benefits right now, he said, is "trying to get blood out of a turnip."

The stimulus package included a waiver for the first $2400 in unemployment benefits income and should ease the burden, but most benefits recipients will have to find that extra few hundreds, maybe thousands in taxes this coming April 15.

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