unemplogo.jpg (50480 bytes) The Division of Unemployment Insurance serves workers who are unemployed through no fault of their own by providing temporary income maintenance during their period of unemployment and making referrals to re-employment services.

The Division also serves employers by ensuring that only those unemployed individuals meeting all eligibility criteria receive UI benefits, thereby protecting future increases in employer tax rates and the solvency of Delaware’s UI Trust Fund.

TAX LIABILITY ON BENEFITS

Any unemployment insurance benefits you receive will be fully taxable, provided you are required to file an income tax return. While State taxes will not be withheld from your unemployment insurance check you may elect to have Federal taxes withheld from your check at a set rate of 15%. You will be furnished a statement, form I 099-G, reporting the benefits paid to you and taxes withheld. The Internal Revenue Service will be given the same information. It is your responsibility to determine the amount of your tax and pay the amount due on your annual federal and state income tax returns, using the information provided to you on the 1099 form. The Division of Unemployment Insurance at the end of January will issue form 1099-G to you. The Internal Revenue Service will also receive a copy of this form. Benefits paid on interstate claims will be reported by the paying state.

Notify your local unemployment insurance office, in writing, if you change your address. If you have questions regarding the payment amount listed on the 1099-G, you may seek assistance by calling the Division of Unemployment Insurance at (302) 761-8484. Ask to speak with a Benefit Accounting Specialist.

Address all questions regarding your federal income tax return to the Internal Revenue Service and all questions regarding your state income tax return to the State of Delaware, Division of Revenue.

 

SEE THE FOLLOWING COPY OF PUBLICATION 905 FROM THE INTERNAL REVENUE SERVICE REGARDING YOUR FEDERAL TAX LIABILITY.

PUBLICATION 905 Department of Treasury Internal Revenue Service

"UNEMPLOYMENT COMPENSATION: IT'S TAXABLE

Did you know that unemployment compensation you receive is subject to federal income tax? Receiving this income could require you to file a tax return and income tax.

You include unemployment compensation in your total income to determine if you are required to file a return. Filing requirements are explained in the Form 1040 and Form 1040A instructions and in Publication 501 Exemptions, Standard Deduction, and Filing Information.

When you work, your employer withholds money from each paycheck to pay taxes. But when you receive unemployment compensation, nothing is withheld from your check. This means you may have to pay estimated tax to meet your tax obligation. You do this by sending a voucher each quarter to the IRS along with a payment for the amount you estimate you owe. Use Form 104OET, Estimated Tax For Individuals, and the vouchers that come with the form, to figure your estimated tax and to make your payments.

You should start paying estimated tax as soon as you begin receiving unemployment compensation. Otherwise you may owe a large balance when you file your return, and you may be charged a penalty for underpayment of estimated tax. If you are married and file a joint return and your spouse works, you can ask your spouse to have additional tax withheld instead of paying estimated tax.

You can find out more about estimated tax and how to pay it by calling or visiting your local IRS office, or calling 1-800-829-1040 for assistance. To order publication 505, Tax Withholding and Estimated Tax, Form 1040ES, and Publication 501, call I -8 TAX-FORM (1-800-829-3676). Contact your state income tax office regarding the treatment of unemployment compensation for state income tax purposes.1'