Yes. You must include all unemployment compensation received in the income you report on your taxes each year.
You should receive a Form 1099-G, and the total unemployment paid to you will show in box 1. Make the entry in the program:
- Federal Section
- Enter Myself
- Unemployment Compensation
- Add or Edit a 1099-G.
You may choose to have federal income tax withheld from your unemployment by completing Form W-4V, Voluntary Withholding Request and submitting it to your unemployment office. The taxes will be withheld at 10% of your payment. Additional state taxes may be necessary depending on where you live, so you should check with your individual state. For a copy of Form W-4V click here.
Repayment of Unemployment Compensation
If you repaid in the current tax year any unemployment compensation you received for the year, you can subtract the amount you repaid from the total amount received. You will make that entry in our program by going to:
- Federal Section
- Enter Myself
- Unemployment Compensation
- Repayment screen.
If the repayment was made in the current tax year for a prior year where the unemployment compensation was claimed as income and it was less than $3,000 enter it here:
- Federal Section
- Deductions
- Enter Myself
- Itemized Deductions
- Miscellaneous Deductions
- Add Additional.
* Effective Tax Year 2018 repayment of unemployment income for a prior year that was less than $3,000 is no longer deductible.
If greater than $3,000 it is claimed here:
- Federal Section
- Deductions
- Enter Myself
- Itemized Deductions
- Miscellaneous Deductions
- Repayment under claim of right (if greater than $3000).
For further information see Publication 525.
