Supplemental Unemployment Benefits

Supplemental unemployment benefits received from a firm’s financed fund to which the employees did not bestow are not unemployment compensation. These supplemental unemployment benefits are then taxable income subject to income tax withholding but are not considered for social security tax, Medicare tax or federal unemployment tax. These supplemental unemployment benefits are usually paid under guaranteed annual income plans and must be reported on your tax return.

If you repay the supplemental unemployment benefits in a later tax year, then you must include the full amount of the supplemental unemployment benefits you received as taxable income for the tax year you received them on your tax return. Instead if you repay it in the same year, the amount you repay is reduced from the total supplemental unemployment benefits. This repayment should be done under the Trade Act of 1974. If the supplemental unemployment benefits repayment is $3,000 or less than that, then claim a tax deduction on Line 36 of Form 1040. If it is greater than $3,000 you can take a tax deduction on Line 27 of Form 1040, Schedule A or claim a tax credit on your tax return.