The Basics on Unemployment Benefits

Eligibility for Unemployment Benefits

Generally, an individual is eligible for unemployment benefits if they are unemployed through no fault of their own. Since unemployment benefits are a joint federal and state program, eligibility factors may vary from state to state.

Duration of Unemployment Benefits

Regular benefits are paid for a maximum of 26 weeks in most states. However, extensions may be available in times of economic downturn.

Unemployment Benefits are taxable.

Unemployment benefits are considered taxable income and must be included on your income tax return. You should receive a Form 1099-G for Government Payments. This form will show the amount paid to you and the amount of any federal income tax withheld.

Paid under federal or state law

There are various types of unemployment compensation. For tax purposes, unemployment benefits include amounts paid under federal or state unemployment compensation laws.

 Private benefits may be taxable.

Unemployment benefits received from a private fund you voluntarily contributed to are also considered taxable income and should be included on your tax return as “Other Income”. Keep in mind, you are only taxed on any amount that exceeds the total payments you contributed to the fund.

You can have tax withheld.

You can choose to have federal income tax withheld from your unemployment. This can be done by using Form W-4V, Voluntary Withholding Request. If you choose not to have tax withheld, you may need to make estimated tax payments during the year.

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