If I spent around 90% of my state unemployment money for tools for my self-employment all bought from authorized retailers, can that be used as deductions on a 1040?

You have to report the unemployment as income on your return through the 1099-G.   Regardless of what you spent the money on, it is considered income and you have to report it as income.

 

The purchase of the tools just becomes an expense of the business and is  deducted as a business expense.   It does not matter where the money came from to purchase the tools.    

 

The expense would be reported on the Schedule C (if you are a sole-proprietor or have a single member LLC).   

 

The fact that you used the unemployment to buy these tools, you may want to consult an accountant so that this is reflected correctly in your business records.