Taxes and Unemployment

While some of the American Recovery and Reinvestment Act provisions for the unemployed are no longer in effect, there are still some services and benefits available for the jobless. 

• Unemployment Benefits: Unemployment benefits have been extended to a maximum of 99 weeks. The benefits are fully taxable, but you can opt to withhold 10% of your unemployment benefits to help you pay federal taxes, as well as withhold state income taxes. To withhold your taxes, file a Voluntary Withholding Request (form W-4V). 

If you want to find out if you qualify to receive unemployment benefits, please read How to Apply for Unemployment Benefits Online.

• Food Stamps: All qualifying families now receive their allotments by electronic benefits transfer instead of food stamp coupons (which are defunct as of June 17 2009).  Food stamps are not considered taxable income.

• Health Insurance: While the 65% subsidy of COBRA premiums ended in June 2010, involuntarily terminated workers can still get health coverage under COBRA. The program allows workers to continue their former employer's health coverage for up to 15 months while paying 110% of the premiums, as long as the workers are not eligible for another group plan or Medicare.

Laws on this topic may vary from state to state. This content is not meant to provide you with complete information and it is not intended to be legal or tax advice. It is recommended that you consult with your own attorney, accountant or other advisor regarding your specific situation.