Unemployment benefits are considered taxable income for both Federal and State Income Tax purposes. However, no income tax is taken out of your payment unless you tell us to do so in writing. You may elect to withhold Federal income taxes, both Federal and Minnesota income taxes, or no taxes.
If you choose withholding, Federal income taxes will be withheld at a 15 percent rate. Minnesota income tax will be withheld at a five percent rate. This means that a total of 20 percent will be withheld from the payments of those applicants who elect the Federal and State withholding option. You may change your choice on this option once in your benefit year. You will be issued a Form 1099G at the end of January showing the amount of benefits paid to you.
This article is intended to be helpful and informative. But even common legal matters can become complex and stressful. A qualified employment lawyer can address your particular legal needs, explain the law, and represent you in court. Take the first step now and contact an attorney in your area from our directory to discuss your specific legal situation.