Do I Have To Pay Taxes On My Unemployment?

By the James Family Tax team

Yes. Unemployment benefits are taxable income for federal purposes, and you must report them on your tax return. Texas has no state income tax, so Texans owe federal tax only.

How Will I Know How Much I Received?

Your state unemployment agency sends Form 1099-G in January. It shows the total benefits paid to you and any federal tax withheld. In Texas, you can also download it from your Texas Workforce Commission account.

Are Taxes Taken Out Automatically?

No. Tax is withheld only if you ask for it. You can choose to have 10% withheld for federal income tax when you apply, or later by submitting Form W-4V to your state agency.

What If I Didn’t Have Tax Withheld?

Set aside about 10% of each payment so you’re ready at tax time.
Make quarterly estimated payments with Form 1040-ES.
If you start a new job, adjust your W-4 to withhold a little extra for the rest of the year.

Do I Have to Report It If I Didn’t Get a 1099-G?

Yes. All unemployment benefits must be reported. If you think you’re missing a form, or the amount looks wrong, contact your state agency. A 1099-G for benefits you never received can be a sign of identity theft.

Unemployment is hard enough without a surprise tax bill. We can help you plan ahead or sort out a balance due.

Source: IRS: Unemployment compensation.

How James Family Tax Can Help

Want a professional to handle your return? Our Tax Family is here year-round at our San Antonio and Schertz offices.

Book an appointment at our San Antonio or Schertz office, or call (210) 864-1788.