It can be stressful to deal with the loss of a job, even if you have just been laid off. You’re struggling to find out how to meet the ends, and unemployment benefits can be the answer to the help you’re looking for. You must remember, though, that they are taxable. You must include any compensation you receive from unemployment benefits when calculating your income for the year. This amount should be reflected in Form 1099-G, Certain Government Payments, which details any already withheld federal tax and the amount of benefits paid to you.
Although there are several different types of unemployment benefits, you should typically include any income you have been paid under the federal or state government’s unemployment law. You should also include benefits paid to you by a union. Separate rules apply to non-deductible contributions to specific union funds. In the case of non-deductible contributions, you only have to include the amount of income higher than your contribution. You can choose to withhold federal tax from unemployment benefits using Form W-4V, Voluntary Withholding Application. Otherwise, payments based on an estimated tax amount may be required.