What to know when filing taxes if you received unemployment in SC
A new year is here, and with it, the headache of filing tax returns. For the hundreds of thousands of South Carolinians who found themselves out of work last year, the process this year includes an added step — noting how much they received in unemployment benefits.
To help, The Island Packet has assembled a guide to aid your navigation through this process.
Federal income tax return
Unemployment benefits are taxable income and must be reported to the Internal Revenue Service. But there is a form to help you figure out what you owe.
Your 1099-G shows the unemployment compensation and state and local income tax refunds you received during the past year. According to the South Carolina Department of Employment and Workforce, 1099-Gs were sent out during the last week of January but can also be downloaded from DEW’s unemployment benefits portal.
Fill out the IRS’s Form 1040, the individual income tax return, and Schedule One, where you’ll list the amount of unemployment compensation you received.
For more information on how to fill out the 1040, see here.
DEW notes on its website that it does not automatically withhold federal and state taxes from unemployment recipients’ weekly payments. Those who file initial claims must choose to have taxes withheld from their weekly payments; otherwise, DEW will not withhold them. Federal withholdings, DEW notes, are 10% of the total benefit, and state withholdings are 7%.
You can change your withholding choice in DEW’s MyBenefits portal.
State income tax return
Unemployment compensation is taxable to South Carolina if it is paid by the state or received by a state resident, the state Department of Revenue website notes.
Federal taxable income determines South Carolina income tax liability, so fill out the state form, SC1040, using information from the federal 1040 form. Any unemployment compensation you received should be included on line 1 of the state form.
Then, on line 20 of the SC1040 form, enter the total amount of state tax you had withheld from federal 1099s — the forms that show how much unemployment compensation you received from the state in the past year. Attach copies of all 1099s to the front of the SC1040.
For more information, read DOR’s guide here.
Disputes
According to DEW, if you believe the amount listed on your 1099-G is wrong, you can dispute it through the unemployment benefits portal. You can learn more about how to do that here.