Is unemployment taxable in Texas?

The figures for your return come from Form 1099-G, Certain Government Payments, which TWC mails each January to everyone it paid benefits in the previous tax year.

Getting your Form 1099-G

Starting in mid-January, you can also get your 1099-G information online or by phone:

• Online: log on to Unemployment Benefits Services (UBS), TWC's online system for your claim, and select "IRS Tax Information" from the Quick Links menu.
• By phone: call Tele-Serv at 800-558-8321, select your preferred language, then select Option 2.

If you received benefits in the prior calendar year and your 1099-G has not arrived by February 1, TWC may not have your correct address. Make sure your address is correct before you request a duplicate:

1. To update your address, log on to UBS, select My Contact Information from the Change My Profile menu, and change it.
2. Call Tele-Serv at 800-558-8321, select your preferred language, then select Option 2 to request a duplicate 1099-G.
3. Enter your Social Security number and follow the prompts.

Having TWC withhold tax from your payments

Withholding is completely voluntary. If you ask for it, TWC withholds 10 percent of the gross amount of each payment before sending the payment to you.

You choose your withholding option when you apply for benefits online through UBS. To review or change it later, you can:

• Log on to UBS and select "IRS Tax Information" from the Quick Links menu on the My Home page.
• Call Tele-Serv at 800-558-8321 and select Option 2, then Option 5.

If you do not have tax withheld, the IRS says you may be required to make quarterly estimated tax payments.

Reporting benefits on your federal return

Form 1099-G shows the unemployment compensation paid to you in Box 1 and any federal income tax withheld in Box 4. Use the information from the form, but do not attach a copy of the 1099-G to your federal return. TWC has already reported that information to the IRS.

You can file your federal return without the 1099-G as long as you know:

• The total unemployment benefits TWC paid you during the previous calendar year
• The federal taxes withheld, if any, during that year
• TWC's Federal ID number, 74-2764775, which you enter when you report the benefits TWC paid you

If the amount on your 1099-G looks wrong

Your 1099-G shows the amount TWC paid you, even if you received less because of:

• An overpayment, even if you repaid all or part of it
• Benefits TWC absorbed or withheld to reduce an overpayment
• Debit card payments voided because you did not activate the card within one year of the deposit
• Delayed payments issued for a prior claim
• Payments issued in the year the form covers and canceled in the next year
• Another change to your claim

The amount may be the total of benefits from more than one claim. It is also based on the date TWC paid you. If you requested payment for weeks in one calendar year and TWC paid them in the next, TWC reports that income for the year it paid the benefits.

For any of these reasons, TWC cannot change the amounts reported on your 1099-G. If you repaid part or all of an overpayment, the IRS allows you to deduct the repaid amounts on your income tax return. For more on deducting an overpayment, see the IRS instructions or contact the IRS or a tax professional. How repaying an overpayment works is covered in appeals and overpayments in Texas.

A 1099-G for a claim you did not file

If you get a Form 1099-G for benefits on a claim you did not file, report it right away on TWC's online fraud portal.

• You must report ID fraud through the portal. You cannot report it by phone, by email, or anonymously.
• You only need to submit the report once, and TWC contacts you only if it needs more information.
• If someone filed the claim in another state, you must report the fraud to that state.

If the claim used your Social Security number and you did not receive the payments, you should not report that income on your federal tax return. Do not wait for a corrected 1099-G from TWC to file your taxes. Once TWC has confirmed the claim was filed fraudulently, it sends a corrected report directly to the IRS.

State income tax

TWC says you must report your benefits to the IRS, and also to the state where you live if that state has an income tax. The Texas Comptroller says Texas has no state income tax, and the Texas Constitution does not allow the legislature to tax the net incomes of individuals.