Being without a job is stressful, mentally and financially. For many job seekers, unemployment benefits provide a valuable bridge between their current situation and a new position. The bad news is that these benefits are taxable income. You will receive

Form W2 and/or Form 1099-G with the amount of benefits reported. Use this information to file your tax return.


Additionally, a recent U.S. Supreme Court decision clarified that any supplemental unemployment compensation — not tied to state unemployment benefits — paid by a former employer will be taxable as wages, and therefore social security taxes will need to be withheld from them.