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.
Below are answers to frequently asked questions about benefit payments and taxes.
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 Insurance benefits are subject to federal income taxes. When you submit your initial application, you can choose to have 10 percent of your weekly benefit withheld and sent to the Internal Revenue Service (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:
New Jersey Department of Labor and Workforce Development
PO Box 908
Trenton, NJ 08625-0908
Form 1099-G, Income Tax Statement, showing the amount of Unemployment Insurance benefits paid and amount of federal income tax withheld, will be available for download from your online dashboard 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.
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.
To receive the NJEITC, you must apply and qualify for the federal credit. Then, 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 39% of the federal credit. So if your federal Earned Income Tax Credit is $4,000, your NJEITC will be $1,560.
If you lived in New Jersey for only part of 2019, 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