We're here to help you navigate through the tax forms you need for reporting unemployment. This is the 2nd part in our 2-part series on unemployment and taxes.
For information on the third coronavirus relief package, please visit our “American Rescue Plan: What Does it Mean for You and a Third Stimulus Check” blog post.
When you find yourself unemployed, it's hard to know what to do next, but there are certain concrete steps you need to take such as filing for unemployment in the state where you worked. Unemployment compensation must still be reported on your federal tax return as it's included with your other income such as wages, salaries, and bank interest. You'll be issued a form 1099-G and you'll see the amount of compensation you've received in box one. When receiving the benefits, you can choose to have income taxes withheld to avoid owing a large amount of tax. If you choose to do this, the total federal tax withheld will appear in box four and any state tax withheld will appear in box 11. You'll need to fill out a form W4V in order to qualify for a voluntary withholding request. If you think that you'll owe taxes when you prepare your tax return, you can pay quarterly taxes so you don't owe the government any penalties. Following the above steps will make sure you're handling your taxes properly while you're unemployed and TurboTax is here to support you. For more tax tips and support visit turbotax.com.
Remember, with TurboTax, we'll ask you simple questions about your life and help you fill out all the right tax forms. With TurboTax you can be confident your taxes are done right, from simple to complex tax returns, no matter what your situation.