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May 16, 2023

Is Unemployment Taxable in 2022?

is unemployment taxable in 2022

Unemployment can be an emotionally trying time for workers who have recently found themselves jobless, so discovering you must pay taxes on any money received can only add stress. According to Jackson Hewitt's survey results, 39% of Americans were unaware that unemployment benefits are considered taxable income - however there is good news in that you can request federal taxes be withheld from payments, make quarterly estimated tax payments or directly pay your FUTA tax amount directly.

As one of the millions of Americans who received unemployment benefits during COVID-19 pandemic, you may have seen that federal taxes were withheld from them. This is due to IRS considering jobless benefits as taxable income and households receiving jobless benefits must report them as part of their annual taxes returns. You can view how much federal taxes were withheld using Form 1099-G "Certain Government Payments."

Many states were required to deposit portions of the federal COVID-19 unemployment insurance stimulus funds into their unemployment trust funds in 2021, leading them to experience substantial increases in base SUI tax rates for 2021. Some states enacted legislation to offset this rise, by lowering their UI tax rates temporarily for that year or relieving employers of regular UI taxes during this pandemic - both measures helping mitigate any negative impact on employers' SUI rates.