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The Tax Reform Act of 1986 has made Unemployment Insurance benefits fully taxable. You will be furnished a statement, Form 1099UC or the equivalent, at the end of the year of benefits paid to you. The Internal Revenue Service will be given the same information.
You may choose to have 10% of your unemployment payment withheld for Federal Income Tax. You will be permitted to change a previously selected option. You may change this option by reporting to your Unemployment Insurance office. For more information about withholding or estimated tax, you can obtain a copy of Publication 505, "Tax Withholding and Estimated Tax," by calling your local IRS office.
Have you been discriminated against by a potential or current employer -- as a job applicant or current employee? To best protect your legal rights you should discuss your situation with an employment lawyer. Meet with a local employment attorney sooner rather than later to protect your rights.