Should you have federal income tax withheld from unemployment

On this page:

  • TWC is Mailing 1099-G Forms
  • Reporting Requirements
  • Withholding Taxes from Your Payments
  • Information Needed for Your Federal Income Tax Return
  • Reporting Your Benefits
  • Getting IRS 1099-G Information
  • Requesting a Duplicate 1099-G
  • If Your 1099-G Amount Is Different than You Expect
  • Earned Income Tax Credit
  • Free Federal Tax Filing Services
  • State Income Taxes
  • Forms
  • Service

TWC is Mailing 1099-G Forms

Texas Workforce Commission (TWC) has mailed the Internal Revenue Service (IRS) Form 1099-G, Certain Government Payments, to all claimants who received Unemployment Insurance (UI) benefits in 2020.

Claimants are able to obtain their 1099-G information online by logging onto ui.texasworkforce.org, and selecting View IRS 1099-G Information, or by calling Tele-Serv at 800-558-8321 and selecting Option 2.

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Reporting Requirements

Unemployment benefits are taxable income reportable to the Internal Revenue Service (IRS) under federal law.  You must report all unemployment benefits you receive to the IRS on your federal tax return. 

  • For Internal Revenue Service information, see Did You Receive Unemployment Benefits? Have the right tax withheld for 2020
    Should you have federal income tax withheld from unemployment
    .

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Withholding Taxes from Your Payments

If you are receiving benefits, you may have federal income taxes withheld from your unemployment benefit payments. Tax withholding is completely voluntary; withholding taxes is not required. If you ask us to withhold taxes, we will withhold 10 percent of the gross amount of each payment before sending it to you.

To start or stop federal tax withholding for unemployment benefit payments:

  • Choose your withholding option when you apply for benefits online through Unemployment Benefits Services.
  • Review and change your withholding status by logging onto Unemployment Benefits Services and selecting “IRS Tax Information” from the Quick Links menu on the My Home page.
  • Review and change your withholding status by calling Tele-Serv and selecting Option 2, then Option 5.
  • Complete and return TWC’s federal tax withholding form
    Should you have federal income tax withheld from unemployment
    .

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Each January, we mail an IRS Form 1099-G to individuals we paid unemployment benefits during the prior calendar year.  The 1099-G form provides information you need to report your benefits. Use the information from the form, but do not attach a copy of the 1099-G to your federal income tax return because TWC has already reported the 1099-G information to the IRS.  You can file your federal tax return without a 1099-G form, as explained below in Filing Your Return Without Your 1099-G.

A 1099-G form is a federal tax form that lists the total amount of benefits TWC paid you, including:

  • Unemployment benefits (both regular and federal extended benefits)
  • Federal income tax withheld from unemployment benefits, if any
  • Alternative Trade Adjustment Assistance (ATAA) and Reemployment Trade Adjustment Assistance (TAA) payments

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Reporting Your Benefits

When you report the unemployment benefits we paid you:

  • Enter the TWC Federal ID number as 74-2764775.
  • Enter the amount of taxes withheld at your request, if any.
  • Report the amount of benefits we paid you on the designated line of your income tax return, as shown in the IRS instructions for your type of tax return.

For more information on how to report unemployment benefits on your federal income tax return, see the IRS Instructions or consult the IRS or a tax professional.

If You Received an Overpayment

The amount we list on your 1099-G includes any overpaid benefits. We report the total amount of benefits we paid you in the previous calendar year, regardless of whether you repaid any overpayment.

If you repaid part or all of an overpayment, the IRS allows you to deduct the repaid amounts on your income tax return. For more information on deducting an overpayment on your tax return, see the IRS Instructions or contact the IRS or a tax professional.

Filing Your Return Without Your 1099-G

You can file your federal tax return without a 1099-G form as long as you know:

  • The total amount of unemployment benefits we paid you during the previous calendar year.
  • The amount of federal taxes withheld, if any, during the previous year.
  • TWC’s Federal ID Number, 74-2764775.

You do not need to attach the 1099-G form to your federal income tax return. If you are required to file a state income tax return, you may need to attach a copy of the 1099-G to your state return. Check your state’s instructions on how to complete the state income tax return.

Some professional tax preparers may require a paper copy of your 1099-G form when completing your federal tax return for you.

The Getting IRS 1099-G Information section below tells you how to find the total amount of benefits we paid you, online or by phone.

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Getting IRS 1099-G Information

Find the total benefits TWC paid you last year and the amount of federal taxes we withheld, online or by phone.

Online

Beginning in mid-January, you can find your payment and tax information through Unemployment Benefits Services: 

  1. Logon to Unemployment Benefits Services
  2. Select IRS 1099-G Information from the Quick Links Menu

View a tutorial on how to check your IRS 1099-G information

Should you have federal income tax withheld from unemployment
 online.

By Phone

Beginning in mid-January, you can call Tele-Serv to hear the amount of benefits TWC paid you last year and amount of any taxes withheld.

  1. Call Tele-Serv at 800-558-8321.

Select option 2 and follow the prompts.

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Requesting a Duplicate 1099-G

If you do not receive your Form 1099-G by February 1, and you received unemployment benefits during the prior calendar year, you may request a duplicate 1099-G form by phone:

  1. Call Tele-Serv at 800-558-8321.
  2. Select option 2 and follow the prompts.

We cannot process requests for duplicate 1099-G forms until after February 1 because throughout January we are still mailing the original forms.

You do not need a paper copy of Form 1099-G to file your federal tax return; the IRS only needs the total amount of benefits TWC paid you during the previous calendar year and the amount of taxes withheld.

Updating Your Address

If you do not receive your 1099-G for the prior calendar year by February 1, we may not have your correct address.  You can change your address and then request that we mail a duplicate 1099-G form by completing the following steps.

  1. Logon to Unemployment Benefits Services, select My Contact Information from the Change My Profile menu, and update your address.
  2. Call Tele-Serv at 800-558-8321, and select option 2 to request a duplicate 1099-G. Enter your Social Security number, and follow the prompts. Be sure to correct your address before you request the duplicate form.

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If Your 1099-G Amount Is Different than You Expect

Your 1099-G will show the amount we paid you, even if you received less than that total amount due to:

  • Overpayment, even if you repaid all or part
  • Benefits we absorbed or withheld to reduce an overpayment
  • Debit card payments voided because you did not activate the debit card within one year of the deposit
  • Delayed payments issued for a prior claim
  • Payments issued in the reporting year that were canceled in the next year
  • Another change to your claim

The amount may be the total of benefits from more than one claim.

The amount is based on the payment date, not the period covered by the payment request.

We cannot change amounts reported on any 1099-G form.

Examples

  • Payment Date: You submitted payment requests for weeks in one calendar year, and we issued the payments in the next calendar year. We report the income for the year we pay the benefits, not when you request the payment.
  • Overpayment: You had an overpayment in March and repaid it by sending a check to us in November. We cannot deduct the refund from the total amount shown on your 1099-G. The 1099-G shows the total benefit amount we paid to you in that calendar year but does not show the amount you repaid to us. You must indicate on your tax return the amount you repaid to TWC.

Your History of Benefit Payments

You can view a history of your unemployment benefit payments on Unemployment Benefits Services by selecting Claim and Payment Status.  If you received benefits from more than one claim during the calendar year, you must view each claim separately.

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The Earned Income Tax Credit (EITC) is a refundable federal income tax credit for low- to moderate-income working individuals and families. For more information, see the IRS web page on the Earned Income Tax Credit.

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Free Federal Tax Filing Services

The IRS offers free services to help you with your federal tax return.  Free File is a service available through the IRS that offers free federal tax preparation and e-file options for all taxpayers.  Free File is available in English and Spanish.  To learn more about Free File and your free filing options, visit www.irs.gov/uac/free-file-do-your-federal-taxes-for-free.

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If you are required to file a state income tax return in the state where you reside, you may need to attach a copy of your 1099-G form to your state return. Check your state’s instructions on how to complete the state income tax return.

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What does it mean federal income tax withheld?

For employees, withholding is the amount of federal income tax withheld from your paycheck. The amount of income tax your employer withholds from your regular pay depends on two things: The amount you earn. The information you give your employer on Form W–4.

Is the IRS forgiving taxes on unemployment?

While federal income taxes were waived on up to $10,200 of unemployment benefits for the 2020 tax year, there's been nothing to indicate that taxpayers should expect a similar break for 2021. As far as the Internal Revenue Service is concerned, your unemployment payments are treated just like any other regular income.

Is it better to have taxes withheld from paycheck?

When you have too much money withheld from your paychecks, you end up giving Uncle Sam an interest-free loan (and getting a tax refund). On the other hand, having too little withheld from your paychecks could mean an unexpected tax bill or even a penalty for underpayment.

Does the IRS tax 2021 unemployment?

Unemployment compensation is taxable income. If you receive unemployment benefits, you generally must include the payments in your income when you file your federal income tax return.