If you lose your job, you may qualify for unemployment benefits. Keep in mind that unemployment benefits are taxable.
- Unemployment is taxable. You must include all unemployment compensation as income for the year. You should receive a Form 1099-G, Certain Government Payments, by Jan. 31 of the following year. This form shows the amount paid to you and the amount of any federal income tax withheld.
- Paid under U.S. or state law. There are different types of unemployment compensation. Unemployment includes amounts paid under U.S. or state unemployment compensation laws.
- Union benefits may be taxable. You must include benefits paid to you from regular union dues in your income. Other rules may apply if you contributed to a special union fund and those contributions are not deductible. In that case, you only include as income any amount that you got that was more than the contributions you made.
- You may have tax withheld. You can choose to have federal income tax withheld from your unemployment.
