You may get a refund even though you received unemployment, but it depends on whether you paid enough tax during the year

Unemployment benefits are taxable income. The federal government treats them the same way it treats wages — you owe income tax on the money you received. However, unemployment payments often come without taxes withheld, which means you may have underpaid your taxes for the year. If you underpaid, you could receive a refund when you file.

The key question is not whether you received unemployment, but whether the total tax you paid (through withholding from any job, or through estimated tax payments) was more than the total tax you actually owed. If you paid more, you get a refund. If you paid less, you owe money. If you paid exactly what you owed, you get nothing back.

Many people who received unemployment do get refunds because they had little or no income before the unemployment started, or because they worked only part of the year. But some people owe money instead, especially if they had substantial other income alongside the unemployment benefits.

Key Takeaways

  • Unemployment benefits count as taxable income on your federal tax return, and you must report the full amount you received.
  • If your employer withheld taxes from a job you held during the year, those withholdings may cover part or all of your unemployment tax liability.
  • Many unemployment recipients get refunds because no taxes were withheld from their benefits, but some owe money if they had other income.
  • You will know whether you get a refund or owe money only after you file your complete tax return and the IRS processes it.

How unemployment income affects your refund

When you file your tax return, you report all income you received during the year, including unemployment. The IRS adds up everything — wages, unemployment, self-employment income, interest, and any other taxable money — and calculates the total tax you owe based on your filing status and deductions.

Then the IRS subtracts all the tax that was already withheld from your paychecks during the year. If you worked part of the year and your employer took out federal income tax, those withholdings count toward what you owe. If unemployment was your only income and no taxes were withheld from it, you have zero withholdings to subtract.

The difference between what you owe and what was withheld is your refund or balance due. A refund means you overpaid. A balance due means you underpaid and owe the IRS money.

When unemployment recipients typically get refunds

You are most likely to receive a refund if you worked early in the year, had taxes withheld from your paychecks, and then received unemployment for the rest of the year with no withholding. Your employer's withholding may have been calculated for a full year of wages, but your actual income was lower because you only worked part of the year. That overpayment becomes your refund.

You may also get a refund if your total income (wages plus unemployment) was low enough that you do not owe any federal income tax at all. In that case, any withholding from a job earlier in the year comes back to you as a refund.

The standard deduction for 2024 is $14,600 for single filers and $29,200 for married filing jointly. If your total income is below that amount, you owe zero federal income tax, and any withholding is refunded.

When unemployment recipients owe money instead

You may owe money if you had substantial income from other sources alongside your unemployment benefits. For example, if you received unemployment and also had self-employment income, or if you worked at two jobs during the year, your total income could be high enough that the withholding from your job does not cover your full tax liability.

You might also owe if you received unemployment but had no job and no withholding at all. In that case, you received taxable income but paid no tax during the year. When you file, you will owe the full amount of tax on that unemployment income.

Some people choose to have taxes withheld from their unemployment benefits while they receive them. If you did that, you will have withholding to count toward your tax liability, which reduces the chance that you will owe money.

How to report unemployment on your tax return

You will receive a Form 1099-G from your state's unemployment office. This form shows the total unemployment benefits you received during the year. You report this amount on your federal tax return, on the line for unemployment compensation.

The 1099-G also shows how much tax, if any, was withheld from your benefits. If you chose to have taxes withheld when you applied for unemployment or while you were receiving it, that amount appears in box 4 of the form. Report that withholding as federal income tax paid.

You must file a complete tax return that includes all your income — wages, unemployment, and anything else — to find out whether you get a refund or owe money. You cannot determine this by looking at the 1099-G alone.

What to do if you think you will owe money

If you know you received unemployment and had no withholding, and you think your total income will be high enough to owe tax, you have options. You can file your return and pay what you owe in full. You can also set up a payment plan with the IRS if you cannot pay all at once.

Do not skip filing because you think you owe. Filing late or not at all creates penalties and interest that make the debt larger. The IRS charges a failure-to-file penalty and a failure-to-pay penalty if you do not file on time and do not pay on time.

If you received unemployment and are unsure whether you will owe or receive a refund, you can use the IRS tax software or work with a tax preparer to run through your numbers before you file. Many tax preparation services offer free filing for people with low to moderate income.

Frequently Asked Questions

Do I have to report unemployment income on my tax return?

Yes. Unemployment benefits are taxable income, and you must report the full amount on your federal tax return. The IRS receives a copy of your 1099-G from your state, so they know what you received. Failing to report it can result in penalties.

Can I get a refund if I only received unemployment and had no other income?

You can get a refund only if you had taxes withheld from your unemployment benefits while you received them. If no taxes were withheld and unemployment was your only income, you will owe tax on that income when you file, not receive a refund — unless your total income was below the standard deduction.

What if I received unemployment in one state but now live in another?

You report unemployment income on your federal tax return regardless of which state paid it or where you live now. Some states also tax unemployment income, while others do not. Check your current state's rules, as you may owe state tax in addition to federal tax.

How long does it take to get my refund after I file?

The IRS typically processes refunds within 21 days of receiving your return, though it can take longer if your return is selected for review or if there are errors. You can track your refund status on the IRS website using your Social Security number and filing status.

Can I amend my return if I forgot to report unemployment income?

Yes. You can file Form 1040-X, the amended return form, to add income you missed. You should do this as soon as you realize the mistake, as the IRS will eventually notice the discrepancy when they match your return to your 1099-G.