Tracy’s Tax Tips #3: Filing If You’re Unemployed

If you’re one of the millions of Americans who collected unemployment benefits in 2011, know this: every dollar you received in benefits will be subject to both federal and state taxes.

I’m Tracy Byrnes with the FOX Business Network, here with another of Tracy’s Tax Tips:

Well, those benefits include severance pay and any accumulated vacation or sick pay that was alsop paid out if you left your job in 2011. ?You should get a Form 1099-G from the company or government entity you worked for that issued all your benefit checks. ?The form shows the amount of benefits you’ll need to report on your Form 1040. ?So, if you haven’t had any taxes withheld, or weren’t setting money aside, prepare for the tax blow.

And don’t let it happen again: you should fill out Form W-4V and ask to automatically have federal taxes withheld going forward, though it still may not be enough. ?You will also need to file a separate form to have your state withhold taxes, as well.

I’m Tracy Byrnes, FOX News Radio.