FAQ: Paying federal income tax on your Unemployment Insurance benefits
Although the state of New Jersey does not tax Unemployment Insurance benefits, they are subject to federal income taxes.
For important information on the 2020 tax year, click here.
Below are answers to frequently asked questions about benefit payments and taxes.
If you receive a 1099-G but did not receive Unemployment Insurance compensation payments in 2020, you may be the victim of identity theft. Please report your case of suspected fraud as soon as possible online or by calling our fraud hotline at 609-777-4304.
Please note: Your 1099-G reflects the total amount paid to you in 2020, regardless of the week that payment represents.
Meaning, if you were paid in 2020 for weeks of unemployment benefits from 2019, those will appear on your 1099-G for 2020. Similarly, if you were paid for 2020 weeks in 2021, those will not be on your 1099-G for 2020 – they will appear on your 1099-G for 2021.
If you were overpaid benefits, your 1099-G will still reflect, per federal law, the amount of funds paid to you, regardless of any funds you have returned. Please refer to the section titled “Repayments” in the IRS Publication 525 Taxable and Nontaxable Income for guidance on how to report overpayments/returned funds.
If you still believe the amounts on your 1099-G are incorrect, call your Reemployment Call Center and let the agent know.
If you certify for your benefits online, you will receive a confirmation screen that provides the gross and net amount of your payment, the amount deducted for any refunds or garnishments, tax withheld on your payment, and tax withheld year to date. It will also give the remaining balance on your claim.
Unemployment benefits are subject to federal income taxes. This includes regular Unemployment Insurance, Pandemic Unemployment Assistance, benefit extensions, $600 and $300 weekly Federal Pandemic Unemployment Compensation payments, and $300 FEMA Lost Wages Assistance payments.
The American Rescue Plan Act, signed March 11, 2021, makes the first $10,200 of unemployment benefits tax-free for households with incomes below $150,000. The Internal Revenue Service (IRS) has released guidance for claimants who filed their federal taxes before the signing of the American Rescue Plan Act. This is administered by the IRS so there is no need to call the Department of Labor. Learn more and seek IRS guidance at irs.gov, or consult a tax professional.
When you submit your initial unemployment application, you can choose to have 10 percent of your weekly benefit withheld and sent to the IRS.
You can also select or change your withholding status at any time by mailing a Request for Change in Withholding Status form to us at:
Form 1099-G, Income Tax Statement, showing the amount of Unemployment Insurance benefits paid and amount of federal income tax withheld, will be in January following the calendar year in which you received benefits.
You don't need to include a copy of the form with your income tax return. We provide the IRS with a copy of this information.
For tax year 2020:
- If we have your email address on file, you will receive your 1099-G for 2020 by email by January 30.
- 1099-G information will also be available from the Check Claim Status tool no later than January 30.
You may contact your Reemployment Call Center to request a copy. Depending on the day your request is received, it will take 5 to 10 days or more to receive it.
Workers who are eligible for the federal credit also qualify for the NJEITC. Like the federal credit, the NJEITC can reduce the amount of tax you owe, or increase the amount of your refund check.
Everyone who applies and qualifies for the federal credit is elgible to receive the NJEITC. New for this year, we lowered the age limit to 21 and expanded the NJEITC so you may qualify even if you do not have a qualifying chile or receive a federal credit. To receive the NJEITC, you must file a New Jersey Resident Income Tax return, even if your income is below New Jersey’s minimum filing threshold amount. You cannot qualify for the NJEITC if you and your spouse or civil union partner file separate Income Tax returns.
The amount of your NJEITC is a percentage of your federal Earned Income Tax Credit. This year, the NJEITC amount is equal to 40% of the federal credit. So, if your federal Earned Income Tax Credit is $4,000, your NJEITC will be $1,600.
If you lived in New Jersey for only part of 2020, your NJEITC will be based on the number of months you were a New Jersey resident. For this calculation, 15 days or more equals one month.
For more information about the NJEITC:
For more information about the 2019 federal Earned Income Tax Credit:
- Call the IRS at 1-800-829-1040