Do you know that the unemployment compensation you received is taxable? Yes, it is indeed, although states usually exempt them from state income taxes. Your state’s unemployment insurance office reports the total unemployment compensation for the year on Form 1099-G. You will report the benefits you received on the tax return in Form 1040EZ, 1040A or 1040. Any benefits you received, including benefits under any state program, extended benefits program and trade readjustment allowance benefits must be reported as part of the gross income received on your federal or state income tax returns.

Depending on your tax’s status, you will be responsible to make an estimated quarterly tax payment to the IRS for the tax payable. In general, you have to make an estimated tax payment of what you expect to owe after you deduct withholding and credits at least $1000 t the IRS. You can use the Federal form 1040-Es for individuals.

If you want, you can have the taxes withheld from your unemployment compensation when you receive them. You may request to have the state/federal taxes withheld from the check you receive weekly and automatically forwarded t the DOR or the IRS. The withheld federal tax could be around ten percent of the weekly unemployment benefits payment rate. Tax withheld would be about 5.3 percent. On the next January, the DA will send you a 1099-G statement which shows the total paid benefits and withheld taxes for filing purposes.

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