Michigan Unemployment 1099

It’s January, and that means just one thing – time to start thinking about income taxes. With the tax season approaching, the Michigan Department of Labor and Economic Development wants to remind everyone that Michigan unemployment benefits are taxable.

The Michigan Department of Labor and Economic Development will be mailing 1099 statements to anyone who received unemployment benefits in 2006, during the month of January.  The tax statements, called 1099-G or “Statement for Recipients of Unemployment Compensation Payments,” report how much each person received in unemployment benefits last year. The UIA prepares the annual statements.

“Unemployment benefits are taxable, and those who received benefits will need these statements to prepare their 2006 state and federal tax returns,” Liza Estlund Olson, acting director of Michigan’s Unemployment Insurance Agency (UIA), explained.

Beginning Thursday February 1, anyone with questions about their 1099-G can contact the UIA by phone, or visit a UIA agency Problem Resolution Office for help. Anyone who received unemployment benefits but does not receive the 1099-G by February 1 should contact the agency.

“This year we’ll be sending out approximately 570,000 1099-G forms,” Olson said. “The mailing will begin this Friday, January 19, and will be completed by January 26.”

One frequent question about the 1099-G statement concerns the amount of compensation it reports.

“The total compensation figure on the statement includes not only the amount of benefits paid but also any restitution or court ordered deductions, such as Friend of the Court payments,” Olson explained. “Because of these required deductions, jobless workers may have actually received less than what is reported on the 1099-G. We advise those with these types of deductions to consult with the Internal Revenue Service (IRS) to learn how these deductions affect their taxes and for instructions about reporting them.” Olson noted that the agency must also send the 1099-G information to the IRS and the Michigan Department of Treasury.

If workers chose to have state and federal income taxes deducted from their unemployment benefits in 2006, the 1099-G reports the amount of taxes paid, as well as earnings. 

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