Temporary Tax Exemption for Unemployment Benefits (2009 Tax Year Only)

Unemployment benefits are taxable for both state and federal income taxes. The Economic Recovery and Reinvestment Act (stimulus bill) signed into law in February 2009 by President Obama temporarily suspends federal income taxes on the first $2,400 of unemployment benefits received for the tax year 2009 only. Amounts over $2,400 remain taxable.

What you need to know

  • This deduction will be handled as part of your annual filing of federal income taxes.
  • If you received unemployment benefits during the 2009 tax year, you will receive a form 1099G from the Maine Department of Labor by January 31, 2010. That form will show the full amount of unemployment benefits you received in 2009, including any Federal Additional Compensation ($25.00 payments) received.
  • The IRS will provide instructions for applying for the deduction when you complete your annual income tax form for the 2009 tax year.