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Is unemployment compensation taxable?

Yes, your state unemployment insurance benefits (up to 26 weeks) and your extended benefits (up to an additional 13 weeks) are taxable. You may choose to have 15% withheld for federal taxes by completing Form W-4V. The state will provide you with a Form 1099-G prior to January 31st of each year, showing the amount of taxable benefits paid in the prior year. IRS Publication 525 has more information.

For more information on the tax consequences of a job loss, see Tax Impact of Job Loss.


Source: IRS, Tax Impact of Job Loss, 2002.











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Last update: Tuesday, July 15, 2008




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