There are times in life when we all need financial assistance in the form of unemployment compensation benefits to get us through hard times. Did you know unemployment benefits are considered taxable sources of income?
If you received unemployment benefits in 2006, you will need a New Hampshire 1099 form to complete your tax return. New Hampshire unemployment benefits are taxed at both the state and federal levels in much the same manner as someone employed pays income taxes. Employed workers have income taxes withheld from each paycheck throughout the year. Those of us receiving employment benefits, also called unearned compensation, have the choice of having taxes withheld from each payment check, too, or we can choose to pay them at one time when filing our income tax returns at the end of the year.
Employees with jobs in 2006 are issued W-2 forms that report all earnings plus any deductions required by law. Anyone receiving unemployment compensation will receive a 1099 form listing all benefits paid plus deductions made on his or her behalf for court-ordered restitution or child support. Both the W-2 and 1099 forms are mailed to each individual in January and a copy of the individual’s earnings report is mailed to the New Hampshire Department of Revenue and the US Internal Revenue Service (IRS).
The 1099 form is also used to report earnings paid to independent contractors within the state of New Hampshire. The contractor does not have the option of having taxes withheld from each payment check and must pay when taxes are filed at year end. Some independent contractors with high earnings are required to make an estimated income tax payment in quarterly intervals throughout the year.
All 1099 forms should have been delivered by now so if you haven’t received yours yet, you are urged to contact a local office of the New Hampshire Department of Labor immediately. You will be required to verify your mailing address in order to have your 1099 reissued and you can look for it in the mail in about a week. And remember, the IRS and the New Hampshire Department of Revenue will get a reissued copy, too.