Maine Unemployment Benefits

• Maine workers who lose their jobs may be eligible to receive unemployment benefits from the Maine Department of Labor. The department determines each person's compensation by evaluating his earned income and the length of time he worked. Typically, workers who lose their jobs due to misconduct do not qualify for benefits.
  
  

Unemployment Income Exclusion

• For the 2009 tax year, the IRS allowed taxpayers to exclude the first $2,400 of their unemployment benefits from income tax. The U.S. government created this provision as part of the American Recovery and Reinvestment Act of 2009. Those who received unemployment compensation in excess of $2,400 had to include the amount over $2,400 in their gross income for the year. This exclusion only applied to federal income taxes, so Maine workers who received unemployment benefits in 2009 were required to report the full amount of their compensation to the Maine Revenue Services. The federal exclusion expired at the end of 2009.
  
  

Federal Income Tax Consequences

• At the end of each tax year, unemployment claimants receive a Form 1099-G with the amount of benefits they were issued. The IRS requires that unemployed workers report the full amount of their unemployment benefits on their federal income tax returns. Taxpayers should include their compensation on Line 19 of Form 1040 as part of their total income.
  
  

Maine State Income Tax Impact

• Maine residents must also report their unemployment compensation on their state income tax returns. Since Maine Revenue Services uses the amount of the taxpayer's federal adjusted gross income as a starting point, those who complete a federal return do not have to list their unemployment compensation separately on their Maine state return. Claimants who don't receive a Form 1099-G can look up the total of their Maine unemployment benefits on the Maine Department of Labor website.