Personal taxes


What to Know When Filing Taxes and Unemployed

2 Min Read

What to Know When Filing Taxes and Unemployed



Even If you find yourself unemployed and receiving government aid, there is a good chance you will still have to file your taxes. Dealing with financial uncertainty is difficult enough, so here is a rundown of things to consider when filing in a year in which you were unemployed.

Do I need to Pay Taxes on Unemployment Aid?

Yes, unemployment compensation is listed as taxable income by the IRS and most states. If what you earned during the year (including the unemployment compensation) is more than the IRS minimum required for you to file, this money is subject to tax. Failure to file for such income can lead to penalties down the line.

How Can I Withhold Taxes From Unemployment Income?

To have income withheld from your unemployment compensation during the year, fill out the Form W-4V, Voluntary Withholding Request. You can attain a copy of this form from the IRS website alongside information on how to fill it out. If this is not an option you would like to pursue, you can also make estimated payments.

What Forms are Needed When Filing Unemployment Taxes?

Your state should provide you with a form 1099-G for any unemployment compensation you received throughout a given year. If at any point in that year you were employed, you should also receive a form W-2 from your prior employer.

What Tax Breaks Can I Qualify For Due to My Unemployment?

Depending on your income bracket, becoming unemployed may qualify you for some additional tax breaks. The EITC (Earned Income Tax Credit) is a tax break for low-income individuals or families. You can qualify for this if you make below the IRS specified threshold for the year. Because overall earnings are typically reduced once unemployed, this is something all recently unemployed individuals should check to see if it’s applicable to their situation.

Unemployment compensation will not count toward EITC eligibility, however any other income during the year can be used to calculate a possible credit claim. If you are married and one or both of the spouses are unemployed, your loss of income may make you jointly eligible for the credit.

Something else to take into consideration if you have any children or qualifying dependents is the Child and Dependent Care Credit. Money spent on someone caring for your child or dependent, while working or looking for work, may be deductible depending on your level of income. This credit can be worth up to $2,000 per qualifying child and $500 per qualifying dependent.

Legal Disclaimer

Tickmark, Inc. and its affiliates do not provide legal, tax or accounting advice. The information provided on this website does not, and is not intended to, constitute legal, tax or accounting advice or recommendations. All information prepared on this site is for informational purposes only, and should not be relied on for legal, tax or accounting advice. You should consult your own legal, tax or accounting advisors before engaging in any transaction. The content on this website is provided “as is;” no representations are made that the content is error-free.

We recommend a Pro file your taxes. Click here to file today.Leave your books to professionals. Click to connect with a Pro.Leave your books to professionals. Click to connect with a Pro.Leave your books to professionals. Click to connect with a Pro.
Was this post helpful?
Yes, thanks!
Not really
Thank you for your feedback
Oops! Something went wrong while submitting the form.
Did you know business owners can spend over 100 hours filing taxes?
Is this article answering your questions?
Do you do your own bookkeeping?
Are you filing your own taxes?
How is your work-life balance?
Is your firm falling behind during the busy season?


May 18, 2020


Alvaro Baez

Alvaro Baez


by this author

Share this article