Excerpt from: IRS.gov (click for full article)
Here are four tips from the IRS about unemployment benefits.
- You must include all unemployment compensation
you received in your total income for the year. You should receive a
Form 1099-G, Certain Government Payments. It will show the amount you
were paid and the amount of any federal income taxes withheld from your
- Types of unemployment benefits include:
- Benefits paid by a state or the District of Columbia from the Federal Unemployment Trust Fund
- Railroad unemployment compensation benefits
- Disability payments from a government program paid as a substitute for unemployment compensation
- Trade readjustment allowances under the Trade Act of 1974
- Unemployment assistance under the Disaster Relief and Emergency Assistance Act
- You must include benefits from regular union dues paid to you as an
unemployed member of a union in your income. However, other rules apply
if you contribute to a special union fund and your contributions are not
deductible. If this applies to you, only include in income the amount
you received from the fund that is more than your contributions.
- You can choose to have federal income tax withheld from your unemployment benefits. You make this choice using Form W-4V, Voluntary Withholding Request. If you complete the form and give it to the paying office, they will withhold tax at 10 percent of your payments. If you choose not to have tax withheld, you may have to make estimated tax payments throughout the year.