Taxes are among the harsh realities of life that just cannot be avoided. You are supposed to prepare and submit your annual tax return even if you have been unemployed. And that unemployment benefit you have been earning… well, that too is taxable.
The unemployment benefits are taxable under both state and federal laws. Every year during January, the Department of Labor prepares statements of unemployment benefits earned by different individuals during the previous year, and mails them. This document is called a form 1099. It carries the details of unemployment benefits earned, and state and federal taxes withheld, if any. Everyone who has been earning unemployment benefits is supposed to attach his or her form 1099 with the tax return. It is also required for state tax returns.
If you have been availing yourself of the Virginia unemployment benefits, you should have received your form 1099 by mid-February, at the latest. If you do not receive it by then, please contact the nearest office of the Department of Labor. Follow the same procedure if you simply misplaced your 1099 form. They would verify your contact information to determine if they have the wrong address. They would then issue you a duplicate copy. The Department of Labor also maintains the unemployment record of prior years. If need be, you can also access that data.
Many of the unemployment beneficiaries choose to have their taxes withheld from their income. More than half of the people who received benefits had their taxes withheld. The total amount of taxes withheld in 2007 for unemployment exceeded $6 million.
An unnamed official from the Virginia Department of Labor was reported saying, “Unemployment Insurance benefits not only help workers get by during times of unemployment, it helps stimulate our Virginia economy.” The official added, “With more than $111 million in benefits going out during the year, our state has given significant assistance to both workers and employers in 2006.”