It depends on where the money is coming from and whether or not you’ve contributed to the fund that paid it out. For example, if you receive unemployment compensation through your state government, the full amount is taxable as income.
If you received unemployment benefits from a company-financed fund or a private fund to which you’ve contributed, the income you receive is technically not considered unemployment compensation.
If it’s from a company-financed fund, you’ll include the benefits as wages and will receive a Form W-2 from the company. And if you received the benefits from a private fund to which you’ve contributed voluntarily, you only have to pay taxes on the amount you receive that exceeds what you’ve contributed. You should report these benefits as “other income” on your tax return.
Keep in mind that if you receive unemployment benefits from your state, you may be required to make quarterly estimated tax payments unless you elected to have taxes withheld.
If you repaid any unemployment benefits in the same year you received them your total benefits should be reduced by the amount you repaid.