Gloria22
New Member

Is unemployment taxable

I was laid  off and receiving severance.  I may also receive unemployment, will unemployment be taxable?

SoCalGal21
Employee Tax Expert

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Hi Gloria22!  I just want to be sure I understand your situation.  Are you asking about unemployment you received in 2021? or in 2020?  And which state were you living in at the time?

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kdevere
Employee Tax Expert

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For tax year 2020, the American Rescue Plan waived federal tax on up to $10,200 of unemployment benefits each person collected in 2020 if they met eligibility requirements.  Currently there is no legislation that will extend that benefit to tax year 2021, so to be prudent, it is best to have taxes withheld from your unemployment compensation as it is generally taxable.

The IRS has a tool to determine if you will owe tax on your unemployment compensation.  The tool can be located using the link below.
https://www.irs.gov/help/ita/are-payments-i-receive-for-being-unemployed-taxable

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JordanK_EA
Expert Alumni

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Hi @Gloria22! Sorry to hear that you've been laid off.  If you do receive unemployment it is, typically, taxable and should be included with any other taxable income you have this year. Some states also count unemployment benefits as taxable income. When it’s time to file your taxes, you will need Form 1099-G which will show the amount of unemployment income you received. It will also show any federal taxes you had taken out of your unemployment pay. The 1099-G is only available online in many states, so you may need to log into your unemployment account to get the form come tax time. 

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