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Unemployment Benefits are taxable.

Your taxes will be affected next year if you collected or continue to collect unemployment this year. You are able to adjust withholdings if necessary through the end of this year. For more information from the IRS please read the article below.

Unemployment benefits must be reported on you federal tax return. A record number of Americans are applying for unemployment compensation due to the COVID-19 Outbreak. If you received unemployment benefits, as well as the additional $600 per week in coronavirus relief any time during the year, your tax return may be affected.

  • Do I have to report unemployment benefits on my federal income tax return?
    • Yes, any unemployment compensation received during the year must be reported on your federal tax return.
  • How will I know how much unemployment compensation I received?
    • If you received unemployment compensation during the year, you should receive Form 1099-G from your state’s unemployment office.
  • How will unemployment compensation affect my tax return?
    • If you do not have taxes withheld from your unemployment compensation, it could result in a tax liability.
  • Can I have federal income tax withheld from my unemployment compensation?
    • Yes, you can choose to have federal income tax withheld from your unemployment benefits by submitting a Form W-4V, Voluntary Withholding Request, to your state’s unemployment office.
  • If I am no longer collecting unemployment benefits, how can I pay the tax due?

For the first time, some self-employed workers qualified for unemployment benefits.

For more information, contact your state’s unemployment office and visit: www.irs.gov/UC

Click here for the IRS' Tax Withholding Estimator.

*This information was obtained from the IRS.