How to Claim Unemployment on Taxes

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Unemployment insurance can help keep you afloat if you are laid off from a job. However, all compensation from unemployment benefits above $2,400 must be claimed on your taxes. If you aren't prepared to pay these taxes, you may end up owing more than you had planned. It is important to plan ahead to pay these taxes and to ensure you claim unemployment benefits correctly on your tax forms. Doing so will save you headaches when it comes time to file your taxes with the IRS.

Wait to receive a Form 1099-G from your unemployment benefits program. Note that the total amount of unemployment compensation you received for the year is located in Box 1 of the form. This is the amount you must claim on your taxes; it will be taxed at the same rate as your standard income or wages.

Obtain the proper version of Form 1040 you need to file your taxes; this will determine the line of the form on which you report your unemployment compensation. Record your total received unemployment amount on line 3 of Form 1040EZ, line 13 of Form 1040A, or line 19 of a standard Form 1040.

Add the amount of your unemployment benefits to your other income from the year. Remember, this income is treated like any other -- you will not separate it from your total income when you are calculating the taxes you owe to the IRS.


Withhold approximately 15% of your unemployment payments when you are receiving them, or file a W-4V to have 10% automatically withheld. This way you will ensure you have money to pay the taxes on the unemployment benefits you have to claim. Consult an accountant or other tax professional if you have concerns about how to properly claim unemployment on your taxes.