How to Handle Georgia Unemployment Tax Withholding

Receiving unemployment benefits in Georgia provides a temporary financial bridge during a period of joblessness. This assistance is administered by the Georgia Department of Labor (GDOL) and comes with specific responsibilities for the recipient. Understanding these obligations from the outset ensures that you can manage your finances effectively and remain in compliance with tax authorities.

Taxation of Unemployment Benefits in Georgia

When you receive unemployment compensation, these funds are considered taxable income at both the federal and state levels. The Internal Revenue Service (IRS) views unemployment benefits as a replacement for taxable wages, and therefore, they must be reported on your annual federal income tax return. You are responsible for paying the appropriate income tax on these amounts.

The compensation is subject to Georgia’s state income tax. For 2025, Georgia has a flat state income tax rate of 5.39% that applies to this income. Failing to account for these tax liabilities can result in a significant tax bill, and potentially penalties, when you file your annual returns.

Unlike wages from a job where taxes are often automatically deducted, the responsibility for managing taxes on unemployment income falls directly on you. You must proactively account for both federal and state taxes on any benefits paid to you by the GDOL.

Requesting Voluntary Tax Withholding

You can manage your tax obligations by choosing to have income taxes withheld directly from your unemployment benefit payments. This is a voluntary action and requires you to make separate elections for federal and state taxes. Opting for withholding can be a convenient way to pay your taxes as you receive the income, preventing a large balance due when you file your tax return.

To initiate federal tax withholding, you must complete and submit IRS Form W-4V, Voluntary Withholding Request. This form instructs the GDOL to withhold a flat 10% of your weekly benefit amount for federal income tax. No other percentage or dollar amount is permitted for unemployment benefits. You can obtain Form W-4V directly from the IRS website before submitting it to the GDOL, not the IRS.

For state taxes, you can elect to have taxes withheld when you first apply for benefits or at a later time. This election is made through the GDOL’s “My UI” online portal, where you can choose to have the current state tax rate withheld from your payments.

The most efficient method for setting up withholding for both federal and state taxes is through the GDOL’s “My UI” online portal. After logging into your account, you can make your withholding elections electronically. This allows for the quickest processing of your request.

If you are unable to use the online portal, you have the option to mail the physical Form W-4V for federal withholding. You should send the completed form to the GDOL service center that handles your claim, but check the GDOL website for the correct address. Submitting the form by mail will take longer to process, so withholding may not begin for several payment cycles.

Managing Tax Obligations Without Withholding

If you choose not to have taxes withheld, the primary method for meeting this obligation is by making quarterly estimated tax payments. This process involves calculating your expected tax liability for the year and paying it in four installments directly to the IRS and the Georgia Department of Revenue. These payments prevent you from owing a large sum at tax time and help you avoid underpayment penalties.

For federal taxes, you would use IRS Form 1040-ES, Estimated Tax for Individuals, to calculate and make your payments. The payment due dates are April 15, June 15, September 15, and January 15 of the following year. For Georgia state taxes, you would use Form 500-ES, Individual and Fiduciary Estimated Tax Payment Voucher, to submit your quarterly payments on the same schedule.

Regardless of whether you choose withholding or make estimated payments, the GDOL will send you a tax statement at the end of the year. This document, Form 1099-G, Certain Government Payments, reports the total amount of unemployment compensation you received during the calendar year. It will also show the total amount of any federal or state taxes that were withheld from your payments.

You will receive Form 1099-G by January 31 of the year following the year you received benefits. The GDOL makes this form available electronically through the “My UI” portal. This form is for accurately completing your federal and state income tax returns, as you must report the total unemployment income shown in Box 1.