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Unemployment Compensation

Updated: Jun 11, 2022

The tax treatment of unemployment benefits you receive depends on the type of program paying the benefits. Unemployment compensation includes amounts received under the laws of the United States or of a state, such as:

  • State unemployment insurance benefits

  • Benefits paid to you by a state or the District of Columbia from the Federal Unemployment Trust Fund

  • Railroad unemployment compensation benefits

  • Disability benefits 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 of 1974, and

  • Unemployment assistance under the Airline Deregulation Act of 1978 Program

  • Federal Pandemic Unemployment Compensation provided under the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020

  • Benefits from a private fund if you voluntarily gave money to the fund and you get more money than what you gave to the fund.

If you received unemployment compensation during the year, you must include it in gross income. To determine if your unemployment is taxable, see Are Payments I Receive for Being Unemployed Taxable?

How to Pay Taxes for Unemployment Compensation

If you received unemployment compensation, you:

  • May be required to make quarterly estimated tax payments, or

  • Can choose to have federal income tax withheld from your unemployment compensation. Refer to Form W-4V, Voluntary Withholding Request and Tax Withholding.

Reporting Unemployment Compensation

You should receive a Form 1099-G, Certain Government Payments showing the amount of unemployment compensation paid to you during the year in Box 1, and any federal income tax withheld in Box 4. Report the amount shown in Box 1 on line 7 of Schedule 1, (Form 1040), Additional Income and Adjustments to Income PDF and attach this to the Form 1040 or Form 1040-SR. Include the withholding shown in Box 4 on line 25b of Form 1040 or Form 1040-SR.

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