Business, Legal & Accounting Glossary
Unemployment income is compensation received from state and federal programs by temporarily unemployed workers. The program to provide unemployment income was created as a part of the Social Security Act of 1935 and, though it is a federal program, is managed mainly by individual states. Included in unemployment income are benefits from state unemployment insurance as well as compensation received from states through the Federal Unemployment Trust Fund. Other types of compensation considered unemployment income include:
Unemployment income is taxable and included in gross income. Unemployment income should be reported to the IRS on either Form 1040 or Form 1040-EZ. Form 1099-G will be sent to individuals who received unemployment income during the tax year detailing the amount of unemployment income received. Supplemental unemployment benefits provided by a company are taxable wages and as such are not considered unemployment income by the IRS. Likewise, unemployment benefits coming from a private fund that an individual pays into are not considered unemployment income unless the amount received is greater than the amount paid into the fund. If a taxpayer is required to pay estimated taxes as a result of receiving unemployment income, the taxpayer can submit a Voluntary Withholding Request (Form W-4V) to have federal income tax withheld from the unemployment income instead of making quarterly tax payments.
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This glossary post was last updated: 5th February, 2020 | 0 Views.