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Taxes On Benefits: Are Unemployment Insurance Benefits Taxable?

Updated : November 28th, 2022

The Coronavirus outbreak has caused an unprecedented job loss and financial crisis. To provide the unemployed with temporary financial support, states pay unemployment insurance (UI) benefits to the claimants. There are a lot of questions concerning this financial aid, one being, are unemployment insurance benefits taxable? 

The answer is a big Yes. The federal government considers unemployment benefits as wages and subjects them to taxes. But, when it comes to state taxes, it depends solely on the state in which you live. Many states follow the federal rules and fully tax the UI benefits, while other states tax a portion of the benefits or don’t tax at all. 

How Do Unemployment Benefit Taxes Work?

Unemployment insurance benefits are subject to different types of taxes: Federal Tax, State Tax, and City Tax.

1. Federal Taxes On UI Benefits

The UI benefits are subject to federal tax. The state unemployment benefit office will provide you with a 1099-G form, which tells you how much of your benefit is taxed and what you will retain. If you have received the UI benefits through a SUB plan, then they will be included on your W-2 as regular wages. 

But if you received your benefits through a private fund, you only have to pay taxes on the received amount over your contributions and report it on Form 1040.

2. States Taxes

All states administer the unemployment insurance benefits, but not all of them subject the benefits to taxes. The states of California, Pennsylvania, Oregon, New Jersey, and Virginia do not subject UI benefits to taxes, whereas Indiana and Wisconsin require you to pay tax only on a portion of the benefit amount. 

States like New Hampshire, Nevada, Florida, Tennessee, South Dakota, Washington, Alaska, Wyoming, and Texas do not require you to pay taxes on the wages. 

But if you are not living in any of the above-listed states, then you must pay taxes on your unemployment benefits, just as you do for your federal income tax return. 

3. City Taxes 

Some cities of the United States have unique taxation requirements. Cincinnati, Detroit, Columbus, Cleveland, Kansas City, Toledo, and Louisville, require you to pay municipal taxes on your UI benefits.

How To File UI Benefits Taxes?

There is no separate process to file UI benefits taxes. Include the unemployment insurance benefits along with other reported incomes. But you have to requisition the following forms:

1. 1099-G

The state unemployment agency issues 1099-G form through a mail. The form identifies your Total Benefit Amount and the amount of federal taxes withheld the previous year if any. You need not attach this form to your federal income tax return but you may be required to for state income tax returns.

2. W-2

Your W-2 form should include your unemployment benefits, provided you have received them from a SUB plan. The W-2 form must be filed by your former employer, provided they employed you during that specific tax year. 

Stimulus Packages And Taxes 

Unemployment benefits are undoubtedly taxable but not the stimulus payments you are receiving during the Coronavirus pandemic. These payments are not considered as income but refundable income tax credit.

The stimulus packages are an advanced payment of a 2020 tax credit, that is calculated based on your 2018 or 2019 income. If your income was high in 2018 or 2019 but drops drastically within the adjusted 2020 gross income thresholds, you will qualify for the stimulus payment

Final Words 

Whether you can get financial aid or not, no one wants to lose their job. However, if you are facing such unfortunate situations, then file for unemployment insurance benefits. But make sure you avoid committing common mistakes that can lead to denial or delay of your benefits. 

 

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  1. What if you have funds remaining after the 52 weeks? Mainly due to taking jobs on and off throughout that time frame. Are you allowed to receive those remaining funds?

    • James, what state are you in? That might help with the specifics, but in general, unemployment benefits are maxed out at a number of benefit weeks, not necessarily the amount of money you’ve been paid. If your weekly benefit amount has been reduced because you’ve been able to find employment intermittently, that will not affect the date at which your benefits expire.

  2. Hello
    I believe my accounts for nj unemployment is locked due to the identity verification situation. I get an error message saying my claim is expired when I try to claim weekly benefits. I confirmed that I am verified as well

  3. Was laid off job in Florida when office closed. Moved to Kentucky. Can I file a claim for benefits in Kentucky?

    • Hi, Jessie – in general, you apply for unemployment benefits in the state where unemployment taxes were paid on your behalf. In your case, it sounds like that should be Florida. If you’ve never worked in Kentucky, it’s unlikely that you’d be able to collect unemployment benefits from that state. You may want to reach out to someone in the Florida unemployment office to discuss the specifics of your claim and identify next steps.

  4. I no longer receiving checks for over a year now. I only applied during I was off work for few weeks when I was sent home because I had covid. I even retuned the last check from you. After that you called me asking if I needed help finding a job. I told you I went back to work. I don’t understand why you keep sending my job asking for helping you pay claims accurately and timely. What is going on?

  5. I remote worked in Colorado and reside in Florida, I have done all of my registering and reporting on the Colorado site, and it shows pending issues but there is nothing found as to what the issues are. in addition I have faxed the “Register for Work” and “Work history correction form” and it doesn’t show on the site nor have I received a confirmation. The website is not very user-friendly and confusing. I am at a loss as to what to do, calling doesn’t seem like an option as reported by others on this comment site.

    • Hi, Birgitt – as it turns out, if you have a question specific to the information you’ve shared with the Colorado unemployment office, they are the ones you’ll need to connect with. They will be able to access the system from their end and help determine what the issues are. This site is more for general inquiries and we have no line of sight to the information you’ve submitted or the status of your claim.

  6. if someone was denied state unemployment benefits would they still be eligible for FPUC?

  7. I am receiving a widow pension from my late husbands employer. My job was terminated for for no fault of mine in April, 2020. I applied for early SS widow benefits in April 2020. I applied for UI Benefits in NY in April 2020. Will UI Benefits be effected by my widow benefits?

  8. I filed for UC on March 15 and I just received my pin and bank card, however, I still have not received any payment. When I check my claim it says more info is needed. I have sent a couple of emails to UC Live and now I’m just waiting for an answer…
    I think I may have answered a question wrong regarding work, what can I do, if anything to speed up the process?
    Thank You

  9. Hi…I used to live in CA I was tempting for almost a year, I did receive unemployment part of 2019.,but I moved back home to Baltimore, MD about a month ago how can I apply for unemployment I am unable to find employment just yet in Baltimore, MD.

  10. I got laid off from work March 20th 2020,I just got my unemployment claim filed a cupel of days ago but I still have not been able to claim my biweekly benefits.im computer illiterate and can’t see to good and during the day I can’t get any one on the phone.what can I do?ive spent 20 hours a day trying and as you see I’m still trying

  11. It says I have some kind of issue I have been trying to talk to anyone it is almost impossible to get through to anyone I am now online and don’t know where to go.

    • Hi…I used to live in CA I was tempting for almost a year, I did receive unemployment part of 2019.,but I moved back home to Baltimore, MD about a month ago how can I apply for unemployment I am unable to find employment just yet in Baltimore, MD.

    • if they have finalized 92% than why can’t they finish the 8% that have non-mon or adjudication issues and why are there not 5 differant numbers to call

    • Mark,

      Please note this is a private forum and we do not have access to your claim file. Please check the payment status online regularly.

  12. If you are currently on unemployment due to a furlough caused by the coronavirus and in the time of the stay at home order was going on and you moved to a different state but kept applying for new jobs in the new state and also in the previous state up until you finally found a home and moved. will you be still be eligible for the unemployment benefits until you find a job in the new state you live in? even if the employer calls you back and you lived in the new state and you decline because they new you were moving a while before it happened and you were on furlough when it happened so no contact was exchanged between employee or employer, Would you still be eligible for benefits and if so would I have to reapply in the new state or keep Minnesota benefits rolling until I find a job in new state.

    • Jay,

      I would suggest you go ahead and consider applying for UI benefits considering there’s something available for all citizens.

  13. Im trying to restart my Payment claims. I wasnt aware that I had to do a payment request. Now that im trying it’s telling me I have to restart my claims. How can i speak to a representative??.

    • Juanita,

      Getting through the phone line to a representative is nearly impossible. Please try finding answers on the department’s website.

  14. Can my daughter file unemployment if she’s always worked part time , and can now not work because of her underlying health condition and covid19

    • When I did my weekly certification I made more than my weekly benefit amount now it’s telling my I have to reopen my claim will I still receive my $600 for federal pandemic

    • Jamie,

      She might be eligible. Please ask her to check the Unemployment Office’s website and apply accordingly.

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