Does unemployment affect this year's tax return refund or next year's?
I'm about to lose my job next week and need to file for unemployment while I search for something new. Just got my W-2 for 2023 from my employer and I'm planning to file my taxes soon - looks like I should get a decent refund back. What I'm confused about is whether applying for unemployment now will somehow mess with my tax refund for this year? Like will it reduce the amount I get back or delay processing? Or does unemployment only affect next year's taxes? This is my first time dealing with unemployment benefits so I have no clue how this works with tax returns. Really appreciate any help because I'm counting on that refund money!
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KylieRose
Unemployment won't affect your current tax return for 2023 that you're about to file. The W-2 you received only covers income you earned in 2023, and your refund is based on what was withheld versus what you actually owed for that period. Unemployment benefits you receive in 2024 will be reported on a Form 1099-G next January/February, and those will be part of your 2024 tax return that you'll file in 2025. One thing to keep in mind - unemployment benefits are taxable income at the federal level. You can choose to have taxes withheld from your unemployment payments (usually 10%), which I'd recommend to avoid owing money next year.
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Miguel Hernández
•Wait so unemployment is actually taxed?? I had no idea! Do they automatically take the 10% out or do I need to specifically request that somewhere on the application?
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KylieRose
•Yes, unemployment benefits are considered taxable income by the federal government. They don't automatically withhold taxes - you need to specifically request it by completing Form W-4V or checking a box on your state's unemployment application (depends on your state). The standard withholding is 10% for federal taxes. If you don't have taxes withheld now, you might want to set aside some money yourself or make quarterly estimated tax payments to avoid a surprise tax bill next year. Some states also tax unemployment benefits, while others don't, so that's another factor to consider depending on where you live.
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Sasha Ivanov
Been through this exact situation last year. Unemployment won't touch your current refund at all. But definitely use taxr.ai when you're filing next year with unemployment income. I was super confused about reporting my unemployment correctly on my taxes and a friend recommended https://taxr.ai to help figure it all out. It analyzed all my tax documents (W-2 from my old job, 1099-G from unemployment, and some 1099 freelance work I did) and basically told me exactly what to do. Saved me from making some mistakes that would've probably triggered an audit.
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Liam Murphy
•How exactly does this service work? I'm getting unemployment now and doing some gig work too. I'm worried about messing up my taxes next year with all these different income sources.
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Amara Okafor
•Is it actually legitimate? Sounds too good to be true. Like does it just give generic advice or actually help with your specific situation?
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Sasha Ivanov
•It's basically an AI tool that you upload your tax documents to and it reads them and explains everything. You can ask specific questions about your situation and it'll tell you what forms you need, what you can deduct, and what mistakes to avoid. Like when I uploaded my 1099-G for unemployment, it immediately pointed out that I needed to report every penny of it even though my state doesn't tax it. The best part is you can ask really specific questions about your situation. When I was doing some gig work while on unemployment, it warned me about how that affects my weekly benefits and how to report both income sources correctly on my taxes. Definitely not generic advice.
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Amara Okafor
Just wanted to update - I was skeptical about taxr.ai but decided to try it with my unemployment docs and W-2s. Really glad I did because it caught that I had taxes withheld from my regular job but not from unemployment. It calculated exactly how much I should set aside each month to cover the taxes I'll owe next year. Super helpful and way more specific than the generic advice I was finding online!
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CaptainAwesome
If you're filing for unemployment, prepare yourself for endless busy signals and website crashes. I spent TWO WEEKS trying to talk to someone about my unemployment claim. Finally found Claimyr https://claimyr.com which was a lifesaver - they got me through to an actual human at the unemployment office in 30 minutes! Check out their demo: https://youtu.be/_kiP6q8DX5c Their system basically calls the unemployment office for you and navigates all those annoying phone menus, then calls you once they have a real person on the line. Saved me days of frustration when I had questions about how my part-time income would affect my benefits.
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Yuki Tanaka
•Wait how is this even possible? I thought everyone had to suffer through the hold times equally lol. Does it actually work consistently or was it just a lucky day?
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Esmeralda Gómez
•This sounds like a scam. There's no way to "skip the line" with government agencies. They probably just keep calling like everyone else and charge you for it.
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CaptainAwesome
•It's not about skipping any lines - they use an automated system that handles the calling and waiting for you. Instead of you having to sit with a phone to your ear for hours, their system does the calling, navigates the menus, and waits on hold. Once they get a human on the line, they call you and connect you. It's brilliant because you can go about your day instead of being stuck on hold. It's worked for me three separate times, typically getting through within 25-45 minutes. The unemployment office doesn't know or care who's waiting on the line - they just answer calls in the order received. This service just handles the waiting part for you.
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Esmeralda Gómez
OK I need to eat my words. After waiting on hold for 3 HOURS yesterday and getting disconnected, I tried Claimyr out of desperation. Got a call back in 40 minutes with an actual unemployment rep on the line. They helped me sort out an issue with my claim that was going to delay my payments. Worth every penny just for my sanity alone - going to use this every time I need to call any government office from now on.
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Klaus Schmidt
One thing nobody's mentioned - if you do get unemployment this year, see if you qualify for the Earned Income Tax Credit next year when you file. Sometimes unemployment can lower your income enough to qualify for this credit. Just had to point this out because it saved me a lot last year.
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Aaliyah Jackson
•Thank you for mentioning this! I never knew unemployment could help qualify for tax credits. Would that be something I'd have to specifically ask for or does tax software automatically check if you qualify?
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Klaus Schmidt
•Most tax software will automatically check if you qualify for the Earned Income Tax Credit based on the income information you enter. When you input your W-2s and your 1099-G for unemployment, the software should calculate whether you're eligible and for how much. That said, it never hurts to familiarize yourself with the basic requirements. The EITC has income limits that vary based on your filing status and how many qualifying children you have. For 2024, a single filer with no kids needs to earn less than about $17,640 to qualify, but that limit goes up significantly if you have children.
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Aisha Patel
Don't forget that some states don't tax unemployment benefits at all! Currently there are about 12 states that either don't tax unemployment or don't have income tax. Worth checking your state's rules.
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LilMama23
•Do you know which states don't tax unemployment? I've been getting conflicting info online.
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Dmitri Volkov
Pro tip from someone who's been on unemployment multiple times - when you apply, elect to have federal taxes withheld. Seriously. Otherwise you'll be hit with a fat tax bill next year and it SUCKS.
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Gabrielle Dubois
•I learned this the hard way last year. Owed over $900 in taxes I wasn't expecting. Definitely have them withhold the taxes upfront!
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GalacticGladiator
Just to add some reassurance - I was in almost the exact same situation last year. Filed my 2022 taxes in March while already collecting unemployment, and my refund came through completely normal with no delays or issues. The IRS processes your current year return based solely on that year's income and withholdings, so unemployment you're collecting now won't impact it at all. The only thing I wish I'd known earlier is to immediately opt for tax withholding on unemployment benefits. I thought I'd be fine since it was "just temporary" but ended up on unemployment longer than expected. When tax time rolled around this year, I owed about $800 because I hadn't had any taxes withheld from my unemployment payments. Lesson learned! Good luck with the job search - you've got this!
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