Some benefits no longer taxed
In addition, the new law makes up to $2,400 of unemployment benefits tax-free. Previously, all unemployment was subject to taxes. The new break does not apply to jobless pay received in 2008, though. If you received unemployment compensation in 2008, your state should have sent you a Form 1099-G showing the amount paid. You should report that amount on your 2008 tax return.
And, note this: The decision to make jobless pay tax-free applies only to your federal income taxes. Congress can’t tell the states how to handle it and it’s unclear how many, if any, states will follow the fed’s lead.
If you're unemployed, you could qualify for an important new break that helps pay the cost of keeping your health insurance. See Health Insurance Assistance for Unemployed.
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