Benefits Are Taxable

The Tax Reform Act of 1986 provides that all unemployment benefits received are taxable. The Internal Revenue Service and the State Department of Revenue will furnish complete information on how to report and compute the tax. You have the option of having Federal and State taxes withheld from unemployment insurance benefits. Unless you indicate that you would like for taxes to be withheld, they will not be deducted from your unemployment insurance benefits. It may be necessary for you to make estimated tax payments. For more information on when you should make estimated tax payments, see IRS Publication 505, Tax Withholding and Estimated Tax, or the instructions for Form 1040-ES.

You will be furnished a Form 1099-G after the end of the year showing the amount of benefits you have been paid as well as any federal or state tax withholdings. The Internal Revenue Service and the State Department of Revenue will be furnished the same information.

It is the responsibility of each individual to inform the South Carolina Employment Security Commission any time a change of address occurs so the Form 1099-G will be sent to the correct address.

If you have any questions regarding taxation of benefits, you must contact either the Internal Revenue Service or the State Department of Revenue. Your unemployment claims office cannot answer any questions on this matter.