Unemployment Compensation

You can choose to have income tax withheld from unemployment compensation. To make this choice, you will have to fill out Form W-4V (or a similar form provided by the payer) and give it to the payer. The amount withheld will be 15% of each payment.

Unemployment compensation is taxable. So, if you do not have income tax withheld, you may have to make estimated tax payments. See chapter 2.

If you do not pay enough tax either through withholding or estimated tax, you may have to pay a penalty. See chapter 4.

Form 1099-G. If income tax is withheld from your unemployment compensation, you will receive a Form 1099-G, Certain Government and Qualified State Tuition Program Payments. Box 1 will show the amount of unemployment compensation you got for the year. Box 4 will show the amount of tax withheld.

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