Taxpayers who have fallen on hard times and have lost their job may be eligible for unemployment benefits. These benefits can be a lifesaver when you need to support yourself, but it’s important to remember that they are taxable. When you file your tax return keep the following facts about unemployment compensation in mind.

• The benefits will be taxed. As you file your return, you’re required to include all the income you received in unemployment compensation. You’ll receive a Form 1099-G, Certain Government Payments, which will list the amount you were paid and any federal taxes that were withheld.
• Unemployment compensation comes in several different forms, including those paid in accordance to federal or state compensation laws.
• Certain union benefits are also taxable, and must be included in your tax return. You may be subject to other requirements if you contributed to a special union fund or your contributions were not tax deductible. In such cases, you’re only required to include received amounts that are greater than the amount you contributed.
• You can opt to have federal tax withheld from unemployment compensation using Form W-4V, Voluntary Withholding Request. If you don’t have tax withheld, you may need to make estimated tax payments quarterly throughout the year.

The IRS can help. If you’ve lost your job or are struggling financially, there are other deductions and credits you may be eligible for to help ease the burden at tax time. There are a few options to help taxpayers pay their tax bills when they are struggling financially, so don’t hesitate to make appropriate arrangements.