Unemployment Compensation from a Different State

[MSidiqi]

Hi Tax Pros,

Is unemployment compensation which is reported on a 1099G considered wages?

My situation is that I had a job in DC, and my taxes were being withheld in Virginia due to Reciprocity Agreement. I then started getting unemployment compensation from DC with federal taxes withheld and not state taxes, and I lived in Virginia. At last, I got a job in Virginia which of course caused me to stop getting unemployment. Now, having lived in Virginia all year, and receiving unemployment from DC which no state taxes withheld out of it, do I need to file DC return in addition to Virginia? I searched a lot, and the Google says even if it is a reciprocity agreement, I still need to file DC return since unemployment is not the same as W2 wages, and in the case of unemployment (1099G), the reciprocity agreement doesn't apply.

[KeshaH]

Unemployment compensation is taxable to the state you lived in while receiving the benefits, in your case that would be Virginia. You would not need to file a DC return.