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
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?
You may be required to make quarterly estimated tax payments. However, you can choose to have federal income tax withheld. For more information, refer to Form W-4V, Voluntary Withholding Request (PDF). You should receive a Form 1099-G, Certain Government Payments (PDF) 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 19 of Form 1040, Schedule 1, Additional Income and Adjustments to Income (PDF) and attach this to the Form 1040 (PDF). Include the withholding shown in Box 4 on line 16 of Form 1040. For more information on unemployment, see Unemployment Benefits in Publication 525.