 Income tax 2022-2023. Unemployment compensation. Tax software example. Let's do some wealth preservation with some tax preparation. Support a counting instruction by clicking the link below giving you a free month membership to all of the content on our website broken out by category further broken out by course. Each course then organized in a logical reasonable fashion making it much more easy to find what you need than can be done on a YouTube page. We also include added resources such as Excel practice problems PDF files and more like QuickBooks backup files when applicable. So once again click the link below for a free month membership to our website and all the content on it. Here we are in our example form 1040 populated with an assert tax software you don't need tax software to follow along but it's a great tool to run example problems with. You can also get access to the form 1040 related forms and schedules at the IRS website irs.gov irs.gov starting point same as usual single filer Mr. Anderson no dependence we've got the 100,000 w2 income the standard deduction at the 12,950 getting us to the 87,050 if I pull that on over to our tax formula worksheet 100,000 income 12,950 87,050 taxable income we've got the tax calculated by the software page 2 at the 14774 the 15,000 of the withholdings that we're going to say gets us to the 22,226 so there is here 226 we're mainly focused on the first half first half hour we separate then the income side the income statement or taxable income calculated on page one and we're now considering the unemployment compensation. So usually if there's unemployment compensation you'll get the form for it and it's a pretty straightforward type of thing because you'll have a 1099 g typically and that usually indicates that we have income the most complicated thing oftentimes from a tax preparation standpoint for the unemployment compensation is discussing it with the client because they're often going to say hey I thought I thought that that they didn't include unemployment compensation and it's like well yeah that's because last year they did funny stuff the whole COVID thing and they tried to remove the unemployment compensation but it was only a temporary thing like a lot of the temporary stuff and now it's back so now they're including it again they might say well why does that make sense because the government is giving me money and then the government wants the money back you'll have your money back in 30 days and it's like well yeah that's because the state government is giving the money for the unemployment compensation or the local government but on the federal side of things they see that as in essence you know compensation compensation for last night's unfortunately and whatnot for the income tax purposes or whatever and that's just kind of like the rule well what about the fact that I didn't and I didn't have any withholdings on the unemployment compensation it's like well that might work out good that might work out bad because if you lost your job in the middle of the year your withholdings up until that point were probably over withheld which means that might be enough to cover your unemployment compensation however if you got a significant amount of unemployment compensation and very little withholdings then yes that could result in a bad tax consequence okay that said if I just jump to the 1099g and we just say this is going to be the state unemployment unemployment I probably spelled it wrong whatever don't let it drive you crazy or anything this is going to be then right here unemployment compensation so let's say we got 10 000 there boom and then if I go back on over that's going to pull on over into our reform so we're on the schedule one and there's the 10 000 line number seven that then is going to be totaling up down below at the 10 000 pulling back into the form 10 40 10 40 still have the w2 income at the 100 000 and then I'm saying that there's unemployment compensation now you would think that maybe the income wouldn't be quite so high if they had unemployment compensation from the w2 income but just an example problem here so that brings us up to 110 000 and then we've got the standard deduction and so on if you want to put that into our form over here we can say that's going to be a schedule one income item and so I've got alimony alimony here so I'm going to add some lines and say I'm just going to say unemployment unemployment and let's make it uh let's make it black and white I'll leave a couple spaces in case I don't know what maybe we got a couple of them for spouses or whatever so this will just be just the first one unemployment unemployment and I said it was 10 000 so this will be total unemployment let's check the spelling of this thing did you spell it right I did of course I did spelling master if I went back to like grade school I could probably skip in like the 50 percent percent tile of the first graders so I'm going to say let's delete the let's pull this in I'm going to sum this up boom let's bring it on over to page the formula 110 and there's the 12 950 get this to the 97 50 97 50 page 2 17 134 so let's put that here 17 134 and the calculation of the 15 000 withholdings gets us to the 2134 but they probably calculated some penalties of 17 dollars put the penalties for 17 2151 2151 so the general idea of course is in most cases the unemployment is going to be uh includeable in income now remember if there was a situation where the unemployment was wrong for whatever reason and there was a lot of fraud cases that it seemed that the iris was was checking on before meaning you got a 10 99 g but you didn't actually get the 10 000 in this case you want to go to the issuer of the 10 99 and try to get them to give the iris that corrected 10 99 otherwise you're going to have a problem if you had to repay some of the 10 000 because they overpaid you then you're going to say okay they gave me a 10 99 for the 10 000 but i paid back like 1000 let's say so then if i go back on over we've got the difference of 9 000 and it's noting here the 1000 that was paid that's important because the iris of course is going to have a 10 99 that says 10 000 on it so you want to be able to tell them yes there was 10 000 maybe on it but i repaid part of it the refund part of it and therefore it's down to 9 000 so that then they can still tie in the 10 99 to your tax form if you just put 9 000 net without this information then that you would expect the government would probably come back at you and and and say that that that you didn't include the proper amount on the form 10 99 so that kind of detail is important now if you had income from a prior year that basically you had to refund then you might need to look at some instructions with regards to should you amend the prior year or something like that but if the prior year if like in the prior year like 2021 they didn't include unemployment compensation and income then you may not have you know you might not have an issue in that in that instance because because it wouldn't have been included in income anyways but in any case that's the general idea it's usually included in income be careful with the withholding situation if you're if you're in a tax preparation situation and people are calling you and saying hey look i'm getting unemployment because i'm i'm gonna be laid off or whatever then the question is should you have withholdings or not and you might need to do a projection to figure that out actually accurately and and so that's something just to keep in mind as well going forward obviously when you actually do the tax preparation it is what it is by that time you're gonna have to do what's been dictated generally by the 10 99 which is generally to include it in income