IRS: '09 jobless benefits exempt

WASHINGTON -- All or part of unemployment benefits received this year will be considered tax-free for many workers, the IRS has announced.

Under the American Recovery and Reinvestment Act, every person who receives unemployment benefits during 2009 is eligible to exclude the first $2,400 in benefits when they file their tax return next year, according to the agency. For a married couple, the exclusion applies to each spouse, separately.

Unemployed workers who expect to receive more than $2,400 in jobless benefits this year should consider having a flat 10 percent income tax withheld from their benefit payments in excess of that amount, the IRS says. Choosing this option may help avoid a surprise year-end tax bill or a possible penalty for having paid too little tax during the year, the agency says.

-- Daily Staff Report