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 receive a 1099-G but did not receive Unemployment Insurance compensation payments in 2022, 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 2022, regardless of the week that payment represents.
Meaning, if you were paid in 2022 for weeks of unemployment benefits from 2021, those will appear on your 1099-G for 2022. Similarly, if you were paid for 2022 weeks in 2023, those will not be on your 1099-G for 2022 – they will appear on your 1099-G for 2023.
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.
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 available for download from the claim status tool 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.
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.
Both a federal and New Jersey Earned Income Tax Credit (NJEITC) are available to eligible taxpayers.
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. 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.
For 2022, the NJEITC is equal to 40% of the federal Earned Income Tax Credit. So, if your federal credit is $4,000, your NJEITC will be $1,600. If you lived in New Jersey for only part of 2022, your NJEITC will be based on the number of months you were a New Jersey resident. You can count any month in the calculation for a credit in which you had New Jersey residency for at least 15 days.
For more information about the NJEITC:
For more information about the current federal Earned Income Tax Credit:
- Call the IRS at 1-800-829-1040