Almost ten percent of Americans were unemployed in 2010. But being out of work does not excuse taxpayers from filing income tax. The IRS recognizes that the loss of a job create tax issues.

Here are some tax tips and answers to tax questions for unemployed taxpayers.

Is Severance Pay Taxable?
Yes, severance pay is taxable in the year that you receive it. Your employer will include this amount on your Form W-2 and will withhold appropriate federal and state taxes. See Publication 525 for additional tax help.

Is Accumulated Sick Pay and Vacation Pay taxable?
Yes, annual or vacation pay, and sick pay are calculated as wages by your employer and will be included in your Form W-2.

Is Unemployment Compensation taxable?
Yes, your state unemployment insurance benefits (up to 26 weeks) and your extended benefits (up to an additional 13 weeks) are taxable. You may choose to have 10% withheld for federal taxes by completing Form W-4V.
The State will provide you with a Form 1099-G prior to January 31st of each year, showing the amount of taxable benefits paid in the prior year. See Publication 525 for additional information.

Is there a COBRA Health Insurance Continuation Premium Subsidy?
Workers who have lost their jobs may qualify for a 65 percent subsidy for Consolidated Omnibus Budget Reconciliation Act (COBRA) continuation premiums for themselves and their families for up to nine months. Eligible workers will have to pay 35 percent of the premium to their former employers.
To qualify, a worker must have been involuntarily separated between September 1, 2008, and December 31, 2009.
More information on the COBRA subsidy is available from the U.S. Department of Labor.

What about gifts of Cash and Property from family or friends?
Generally, the person who receives the gift is not liable for any taxes on the gift. If the gift produces income like interest, dividends or rent payments, the receiver would be responsible for taxes on that produced income. Each year there is a specific maximum amount that may be given that will not create a taxable event to either the giver or the receiver. Gifts in excess of this maximum may be subject to gift taxes by the gift giver. See Publications 17 or 950 for additional information.

Is Public Assistance or Food Stamps taxable?
No.

When will I get my final W-2 from my employer?
Your employer must provide your Form W-2 by January 31st after the close of the calendar year.

What if my employer filed bankruptcy or went out of business, how do I get my W-2 form?
In either case the employer must file and report your wages and withholding on a Form W-2 at year’s end. If you do not receive your Form W-2, try to contact your employer or their representative. If you are unsuccessful, the IRS can assist you in filing a substitute Form W-2 using your records. A good precaution is to keep year-to-date records or pay stubs until you receive your Form W-2.

If I sell assets like stocks, bonds, and property, are they immediately taxable?
Not necessarily, however the sale of such assets should be reported. If you have a gain on the sale, it may generate an income tax liability. You should review your overall tax situation and make sure you have paid your taxes as required to avoid any estimated tax penalty. More tax help and additional tax information on estimated tax is in Publication 505.

What can I do if I owe taxes and cannot pay them?
Contact the Internal Revenue Service as soon as possible to request a payment plan. Communication is the key to minimizing problems.

Is special assistance available on unresolved tax matters that create hardships?
Yes, if you are experiencing economic harm, a systemic problem or are seeking help in resolving tax problems that have not been resolved through normal channels, you may be eligible for Taxpayer Advocate Services (TAS) assistance. You can reach TAS by calling toll-free 1-877-777-4778

The questions above come verbatim from IRS publications. For IRS tax help and other tax tips visit the IRS website.

source: irs.gov