Do TWC unemployment benefits count as taxable income? Tax filing questions

Yes, unemployment benefits are definitely taxable income at the federal level. TWC will send you a Form 1099-G (usually by January 31st) showing the total benefits you received and any federal income tax withheld. You'll need to report this on your federal tax return. When you initially filed your claim, you should have been asked if you wanted taxes withheld from your payments. If you selected yes, they should have withheld 10% for federal taxes. If you didn't choose to have taxes withheld, you'll likely owe those taxes when you file.

i got hit with a HUGE tax bill last year cuz i didnt have them withhold anything... like $1400 i wasnt expecting!! make sure u check ur payment stubs on the twc website, it shows if they took out taxes or not

To add to what others have said, you can log into your TWC account and look at your payment history. Each payment breakdown will show if taxes were withheld. Look for a line that says "Federal Income Tax" with an amount next to it. If you find they haven't been withholding taxes, you still have options. You can make estimated tax payments to the IRS before filing season or adjust your withholding at your current job if you're employed again. Also, don't forget that unemployment is only taxable at the federal level in Texas - our state doesn't have income tax, so at least you don't have to worry about that part!

I had such a NIGHTMARE dealing with this last year. TWC never sent my 1099-G form and when I tried calling to get a replacement I could never get through!!! Spent WEEKS trying to reach someone. My tax preparer ended up having to estimate the amount and I had to file an amended return later. The TWC phone system is ABSOLUTELY USELESS!!!

If ur worried about owing, you might qualify for Earned Income Credit if ur income was low enough overall. That helped offset my unemployment taxes last year.

When I couldn't get my 1099-G last year and needed to reach TWC urgently for tax filing, I found this service called Claimyr that got me through to a TWC agent in about 20 minutes instead of spending days redialing. Their system basically keeps calling TWC for you until they get through, then connects you. Saved me so much frustration! They have a demo video at https://youtu.be/V-IMvH88P1U?si=kNxmh025COIlIzKh and the website is claimyr.com if you need to talk to someone about your tax withholding situation.

Also be prepared that if you DIDN'T have taxes withheld, you might get hit with an underpayment penalty from the IRS!!! They expect you to make quarterly estimated tax payments on unemployment if you don't have withholding. Nobody ever tells you this until it's too late!

Update: I checked my payment history and thankfully I DID elect to have taxes withheld! Each payment shows a 10% federal tax withholding. That's a huge relief. I'll still keep an eye out for my 1099-G in January. Thanks everyone for the help and advice!

my brother forgot to put his unemployment on his taxes last year and got a letter from the irs about it... they automatically get the info from twc so dont forget to include it or theyll come after u

oh another thing nobody mentined... if u had any overpayments that u paid back to twc make sure thats reflected on ur 1099!! sometimes they mess that up and u end up paying taxes on money u had to return

Great tip about checking for overpayments on the 1099-G! I didn't have any overpayments thankfully, but that's definitely something people should watch out for. One more thing I learned while researching this - if anyone here is married and filing jointly, make sure to discuss the tax implications with your spouse. The unemployment income could potentially bump you into a higher tax bracket or affect other credits/deductions. My wife and I are planning to meet with our tax preparer early this year to make sure we're prepared for any surprises.

Just wanted to add another resource that might be helpful - if you're doing your own taxes this year, make sure your tax software can handle unemployment income properly. I used TurboTax last year and it walked me through exactly where to enter the 1099-G information and automatically calculated everything. Some of the free filing options through the IRS website also handle unemployment benefits well. Also, if you're still unemployed or underemployed, you might qualify for free tax preparation through the Volunteer Income Tax Assistance (VITA) program. They have locations throughout Texas and the volunteers are trained specifically on unemployment tax issues since it became such a big deal during the pandemic years.