The U.S. unemployment rate has risen steadily since the start of 2024. It was at just 3.7% at the start of January, but it has since surpassed the 4% mark and now sits at 4.3% as of late July 2024. If you’ve been unemployed at any point in 2024, you might wonder, “If you are unemployed, do you file for taxes?”
It’s worth finding out the answer to this question long before federal taxes and state taxes for this year are due. Continue reading to see where the IRS stands when it comes to filing taxes when you’re unemployed.
If you’re unemployed for an entire year and don’t collect any unemployment benefits, you may have the chance to avoid filing taxes altogether. According to the IRS, single people who make under $13,850 or married couples who make $27,700 aren’t required to file taxes.
However, if you worked for part of a year and were unemployed for the remainder of it, you may still exceed these taxable income thresholds. In this case, the answer to the question, “If you are unemployed, do you file for taxes?” is “yes.” Just because you spent some of the year not working and might still not be back to the job won’t prevent you from having to file your taxes as usual.
Unemployment benefits are notoriously low in some states and often fail to foot the bill for basic living expenses for many Americans. Because of this, some people aren’t sure what the answer to the question, “Is unemployment compensation taxable income or non-taxable income?” is.
We’re here to tell you that unemployment compensation is taxable income. Ideally, you should arrange to set aside some of this income from your unemployment benefits to cover any taxes you might owe. Otherwise, you might pay the price for not doing so come tax time.
If you’re wondering, “If you are unemployed, do you file for taxes?” you may be a little nervous about filing taxes the next time they’re due. You might worry about being hit with a big IRS bill, even when you know your income wouldn’t warrant it.
But some people are pleasantly surprised after filing taxes during a year in which they were unemployed for all or part of it. There aren’t many plus sides to losing a job, but one of the few is that making less money will typically drop you down into a lower tax bracket.
In the end, you may receive a larger tax refund than you were expecting from the IRS. Or, you may see that the taxes you thought you would owe on compensation income are covered by the money you had withheld from your paychecks during the months you were working throughout the year.
Whatever you do, don’t put off filing your taxes if you know you need to do it, even if you’re unemployed. That won’t do anything except cause headaches down the line.
“If you are unemployed, do you file for taxes?” is just one of the many questions you might have for a tax specialist. Levy & Associates can set you up with one to provide answers to them all so you can take charge of your financial future. Give us a call at 877-620-6490 today or fill out this short form, and we’ll reach out to you soon to start the process.
Levy & Associates is available for free initial consultations. We’re happy to answer any questions you have about the audit process or address any concerns about your specific situation.
There’s never a good time to be audited, and the time-consuming process will take away from your business or family if you try to face it alone. Let us handle and coordinate communication, so you can return to your daily life.