Do I need to file taxes on unemployment if I earned less than $12,000 total income?

Yes, you do need to file taxes even though your total income is under $12,000. Unemployment compensation is fully taxable at the federal level and must be reported on your tax return. The IRS considers it income just like wages. The good news is that with your total income being approximately $11,230 ($10,400 unemployment + $650 W-2 job + $180 1099 work), you'll likely owe very little or possibly nothing in federal taxes after standard deduction. However, you still need to file because unemployment benefits are reported to the IRS on the 1099-G form. Filing will also ensure you receive any tax credits you might be eligible for, like the Earned Income Tax Credit, which could result in a refund even if you didn't have tax withheld.

After struggling with a similar situation, I found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure out exactly what to do with my unemployment income. I was confused about filing requirements since I had both unemployment and some side gig income like you. The tool analyzed my situation and explained that unemployment compensation is always considered taxable income by the IRS, so you do need to file. But it also showed me which credits I qualified for that I would have missed otherwise!

Just wanted to update after trying taxr.ai that someone mentioned above. I was skeptical but it actually helped me figure out my unemployment tax situation. I uploaded my 1099-G and it immediately showed me that even though I was under the $12k threshold, I still needed to file because of the unemployment income. The best part was it found I qualified for a refundable credit I didn't know about! Ended up getting back almost $800 instead of owing taxes like I feared. Super easy to use and explained everything in plain English instead of tax jargon.

If you're having trouble figuring this out, I'd suggest trying to contact the IRS directly. I was in the same boat last year with unemployment questions, but it took me FOREVER to get through to them on the phone. Then I found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 15 minutes instead of spending hours on hold. They have a demo video here: https://youtu.be/_kiP6q8DX5c The agent confirmed that yes, you need to file taxes on unemployment income regardless of the total amount, but also helped me understand some credits I qualified for that actually got me a refund instead of owing money.

I have to eat my words about Claimyr from my earlier comment. After struggling for days trying to get clarification about my unemployment taxes, I gave it a shot out of desperation. Honestly shocked that it actually worked - got me through to an IRS agent in about 20 minutes. The agent confirmed what others said here - yes, unemployment income is fully taxable and you need to file regardless of being under the $12k threshold. But they also helped me discover I qualified for the Earned Income Credit which completely offset what I would have owed. Ended up with a small refund instead of owing hundreds. Definitely worth getting the official answer directly from the IRS.

Remember you might have state taxes to consider too! Federal and state treat unemployment differently. Some states don't tax unemployment at all, others do. What state are you in? That could make a difference in whether you need to file a state return.

I went through this same problem last year! Tax laws are so confusing... I used TurboTax Free Edition and it walked me through everything. Since your income is under $12k, you should qualify to file completely free. Just make sure you go directly through the IRS Free File program so you don't get upsold on paid services.

I've been helping people with tax questions for years, and yes, you absolutely need to file. Unemployment compensation is 100% taxable income at the federal level, regardless of the amount. The $12,000 filing threshold doesn't apply when you have unemployment income - it's always reportable. The silver lining is that with your low total income ($11,230), you'll likely qualify for the Earned Income Tax Credit (EITC) which could actually get you money back even though you didn't have taxes withheld. The EITC is designed to help working people with low to moderate income, and your W-2 wages of $650 plus the $180 contractor work should qualify you. Also, don't forget about the standard deduction of $13,850 for 2023. Your income is actually below that threshold, so you might not owe any federal tax at all, but you still need to file to report the unemployment and claim any credits you're eligible for. I'd recommend using the IRS Free File program since your income qualifies you for completely free tax preparation software. Don't let anyone charge you for filing with your income level!