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Few questions on filing unemployment benefits

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  • J.K.Logic
    2015-02-05 06:30:50 PM
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    Unemployment wages are considered taxable income, is that right? What if you only get unemployment for a month or two? Is there a minimum amount you have to get from the govt to consider it taxable? Or do you have to file what you got no matter how small? Also, what are the rates unemployment compensation gets taxed at? I had no idea when I filed that I would have to file it on my taxes at the end of the year. Anyone have any experience with this?
  • bryce28
    2020-04-07 09:13:45 AM
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    You usually have to pay income taxes on all unemployment benefits received. It won't matter if its just for a single week or the max amount of weeks.

    To find out for sure use this IRS tool. Takes about 10 minutes to figure it out -- Are Payments I Receive for Being Unemployed Taxable?

    Typically speaking though, you will be charged a flat income tax rate of 10% of unemployment benefits received. You can opt to defer paying taxes on those benefits until taxes are due the following year, meaning you can get the entire check without any taxes initially taken out. But keep in mind you will still owe those taxes and if you wait past certain deadlines, you will also have to pay late penalties.

  • JFoster
    2020-04-07 07:06:19 PM
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    Also we need to consider state taxes. Currently 34 states require taxes to be paid on unemployment benefits.

    15 states do not tax unemployment income:

    Alabama, Alaska, California, Florida, Montana, Nevada, New Hampshire, New Jersey, Pennsylvania, South Dakota, Tennessee, Texas, Virginia, Washington, Wyoming

    3 states do partially or by a different set of standards:

    Indiana -Although unemployment benefits are taxable in Indiana, part of your benefits may be deductible. The deductible amount depends on your federal adjusted gross income, how much unemployment compensation you receive, and your filing status. Complete the "Unemployment Compensation Worksheet" in the Form IT-40 instruction booklet to calculate the exact amount of your deduction.

    Oregon - generally taxes unemployment benefits received during the year. However, the state does not tax unemployment benefits received as a result of work performed in any federally recognized Indian reservation in Oregon or other land in the state that has been set aside as the home of tribal Indians under federal protection.

    Wisconsin - generally taxes unemployment benefits. However, a portion of your benefits may be exempt from tax. Complete the "Unemployment Compensation Worksheet" in the Form 1 instructions to see if you can exclude any portion of your unemployment benefits from Wisconsin income taxes.

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