Reporting Pat Loeb
Filed underBusiness & Economy, Consumer News, Heard On, Local, News, Philadelphia, Politics, Syndicated Local, Watch + Listen
By Pat Loeb
PHILADELPHIA (CBS) — Laid-off workers may be getting an unpleasant surprise this month when they realize they have to pay taxes on their unemployment compensation.
If you were unemployed during 2011 and collected unemployment benefits, your 1099-G form may be arriving soon, listing the money you got from the government.
But unlike work income that comes listed on a W-2 with the amounts withheld by your employer for federal and state taxes, states provide for withholding only up to 10 percent to pay federal taxes on unemployment benefits.
Dave Stewart, of the Philadelphia regional office of the IRS, says states would have a hard time estimating how much to withhold for each taxpayer.
“You could have somebody that’s laid off making $150,000 versus somebody that was making $25,000,” he notes, “plus you don’t know how many exemptions they’re going to have. It’s not a one-size-fits-all kind of thing.”
So, he says, you may owe more than what’s been withheld and have to come up with a payment on April 15th.
Pennsylvania and New Jersey, at least, don’t charge state income tax on unemployment compensation, but Delaware does — and doesn’t withhold for it.