labor lawAdivision of labor law center

The Massachusetts Dept. of Labor urges workers to check that they have received their 1099 form. As the deadline for filing taxes draws near, it is important to remember that Massachusetts unemployment payments must be claimed as income and are, therefore, subject to taxation. Unemployment earnings are recorded on a 1099-G form, which you should have received from the Massachusetts Department of Labor.

A 1099-G is a “Statement for Recipients of Unemployment Compensation Payments.” The Massachusetts Department of Labor mailed 1099-G statements to anyone who received unemployment benefits in 2006, during the month of January. Unemployed persons should have received their statement no later than February 15, 2007. If you have not received a 1099-G, and you collected unemployment for any part of 2006, you should contact the Massachusetts Department of Labor as soon as possible.

The 1099-G form is important for reporting your income accurately on your tax return. However, it is equally as important to understand what the amounts on the 1099-G mean. You will find a report of the amount you received in unemployment compensation last year. You will also see a report of any federal or state tax withholdings. If you chose to have state and federal taxes withheld from your payments, you will see the total amount reflected on your 1099.

Your total earnings (as reported on the 1099) may be higher than the payments you received. This can be confusing if you haven’t considered other deductions. If you kept track of your payments for unemployment in 2006, total them.

If the total amount you received does not match the total earnings reported on the 1099, it is most likely due to court ordered deductions or restitution you owe. Court ordered deductions could include “Friend of the Court” payments such as alimony you owe to a former spouse, child support payments you make to support your children, payments for health coverage for your children, and other payments due by court order.

There are new unemployment insurance contribution rates in the state of Massachusetts for the year 2007. Those include rates for a positive balance employer under the Schedule D range of 1.12 percent to as much as 5.48 percent. Rates for negative balance employers range from 6.46 percent to 10.96 percent at the highest. For the year 2007, the solvency assessment rate is about 1.19 percent.

Other important rates to know for the unemployment system in the state of Massachusetts include a 2.53 percent rate for new nonconstruction employers. For new construction employers, the rate is 7.12 percent in 2007. Also, the Workforce Training Fund contribution rate is 0.06 percent of the taxable wages.

What all of these numbers mean for employers in the state of Massachusetts is that, first, if you are a new employer in the state, you must register with the unemployment insurance system in the state government. This system takes in money from employers, based on a percentage of payroll, saves that money and uses it to pay out unemployment benefits to laid off workers. For new employers, this contribution percentage rate is generally set by your business type, such as nonconstruction or construction in this case in Massachusetts.

If you are an employer that has been around for more than a year or two, then your percentage payment to the unemployment system depends not only on what industry you are in, but it also depends on how well your experience rating is. An experience rating is based on how on time you pay your unemployment bills, if you pay them at all, as well as how many employees you have laid off recently. For instance, the more folks you lay off, the worse your experience rating will be—because in essence you are “burdening” the unemployment system more than other employers.