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Author: Patnbj Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121351  
Subject: Unemployment tax questions Date: 6/15/2001 9:16 PM
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Hi,

I have two questions.

1) I recently received a lump sum severance package. The taxes were overwithheld on it. I did go back and read previous posts on this subject and do realize why, however my question is: is there a more rapid alternative to getting a refund besides filing as soon as I receive my 2001 W2 next year? I'm not crazy about giving the government a tax-free loan of that money.

2)Since unemployment payments are subject to federal taxes, are they considered wages for IRA contribution purposes?

TIA
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Author: acm4tax Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 51851 of 121351
Subject: Re: Unemployment tax questions Date: 6/16/2001 12:40 AM
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I have two questions.

1) I recently received a lump sum severance package. The taxes were overwithheld on it. I did go back and read previous posts on this subject and do realize why, however my question is: is there a more rapid alternative to getting a refund besides filing as soon as I receive my 2001 W2 next year? I'm not crazy about giving the government a tax-free loan of that money.

2)Since unemployment payments are subject to federal taxes, are they considered wages for IRA contribution purposes?


Unemployment benefits are NOT considered wages for IRA contribution purposes.

No way to expedite the refund for the withheld taxes except to file your taxes as early as possible next tax season. But you can minimize the refund you will wait for by having no or little tax withheld from any other taxable income you earn before the end of the year.

If you use a tax program, like Turbo Tax, you can project how much tax overpayment you will receive by plugging estimated income into a "test"
taxpayer. Then you can determine whether you can afford to have zero taxes withheld on your unemployment benefits or any earnings from a new job you may find.

Best wishes.



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