• Unemployment compensation is fully taxable on the federal return.
  • If the taxpayer has received a Form 1099-G (the generic title is “Certain Government Payments”, but this varies by state), go to the Unemployment Income page [Income > Form 1099-G Box 1 > Add or Edit a 1099-G]. Complete the form:
    • Check the appropriate box at the top to indicate whether the payment was made to the Taxpayer or Spouse.
    • Compare the recipient’s address on the page to the address on the paper Form 1099-G. If they’re different, change the address on the TaxSlayer page.
    • Don’t enter anything in the State Information section unless there was state tax withheld.
  • CA process note: The California form has two parts: Unemployment and Family Leave.
    • Both are reported on Schedule 1 Line 7 as unemployment compensation, EIN 94-2650401.
    • If there are dollar amounts on both parts, add a second Unemployment Income page to enter the Family Leave pay.
  • Note for CA returns: Unemployment and Family Leave income are NOT taxable by CA. (B)
    • TaxSlayer makes the adjustment automatically on CA Schedule CA Part I, Section B line 7.
  • If there was repayment of unemployment, do not adjust the payments to the taxpayer in TaxSlayer. Enter the dollar amounts in exactly as they appear on the Form 1099-G. Amounts repaid are reported separately.
    • Amounts repaid during the same year that benefits were received are entered on Repayment of Unemployment page [Income > Form 1099-G Box 1 > ...] and reduce taxable income on Schedule 1 Line 7.
    • Any amount repaid for a prior year is not entered on this page; it must be deducted on Schedule A, as a miscellaneous deduction, if over $3,000. It does not offset any amount received for the current year.
      • Repayments of $3,000 or less are not allowed as a deduction on the federal Schedule A; this is part of the group of deductions subject to a 2%-of-AGI reduction that can no longer be claimed.
      • Note for CA returns: Repayments of any amount are not deductible as a CA itemized deduction because the original payment was not taxed by CA. If a repayment of over $3,000 is entered on Schedule A, an adjustment (reduction of itemized deductions) is needed on CA Schedule CA Part II line 21. On the “Itemized Deductions” page of the CA State Section, enter the amount in the “Subtractions - Other Miscellaneous Itemized Deductions” box. 
  • Taxable grants: Form 1099-G also has a field (box 6) for taxable gov’t. grants. 
    • See the second bullet in this section, above, regarding basic information to be entered in TaxSlayer, then see NTTC 4012 page D-6.  Note:  the printed 4012 is incorrect here.
    • The amount in box 6 flows to Schedule 1 Line 8z, with the description “FORM 1099G TAXABLE GRANTS”.

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