The short answer
Most government benefits that help with basic needs are not taxable income. Supplemental Security Income, TANF and other need-based public assistance, SNAP, WIC, Medicaid, Medicare, veterans' benefits, workers' compensation, child support you receive and credits such as the Earned Income Tax Credit are generally not taxed as income. Two benefits that surprise people are. Unemployment compensation is fully taxable, and you should receive a Form 1099-G. Social Security retirement, survivor and disability benefits may be taxable, up to 85 percent of the benefit, depending on your other income and filing status, and Social Security reports them on Form SSA-1099. You can ask for federal tax to be withheld from both, which avoids a lump-sum bill. Some taxes are separate from the federal return, since states set their own rules for unemployment and Social Security. Benefits that are not taxable can still count as income for other programs.
The short list
Swipe sideways to see the whole table.
| Benefit | Taxable? | What to know |
|---|---|---|
| Unemployment compensation | Yes, fully | Reported on Form 1099-G. You can have 10% federal tax withheld |
| Social Security retirement, survivor and disability | Sometimes, up to 85% | Depends on your other income and filing status. Reported on Form SSA-1099 |
| Supplemental Security Income (SSI) | No | Not subject to federal income tax |
| TANF and other need-based public assistance | No | Payments from a public welfare fund based on need are not included |
| SNAP, WIC and school meals | No | Food assistance is not income on a federal return |
| Medicaid and Medicare benefits | No | Coverage is not income |
| Veterans' benefits from the VA | No | Not included in income |
| Workers' compensation | No | For injuries on the job, under a workers' compensation law |
| Child support you receive | No | Not income to the person who gets it |
| EITC and Child Tax Credit refunds | No | A credit is not income, though it depends on your income |
The table is general, and details matter. A pension from a government job is taxable, for example, and so is interest on a refund. If a benefit is not on the list, check Publication 525 or ask a tax preparer.
Unemployment: fully taxable
Unemployment compensation is income for federal tax purposes, all of it. Your state sends a Form 1099-G in January showing the total, and the amount goes on your return. Many people do not owe a lot because their total income for the year is lower after a job loss, but the benefits can push income up in a year when they also worked part of it.
You can ask for federal tax to be withheld at 10 percent of each payment, either through your state's claim system or on IRS Form W-4V. It reduces each check but avoids a bill in April. States treat unemployment differently from the federal government, and some do not tax it, so check your state's revenue department. Our guide to unemployment benefits explains how to claim, and our job loss checklist lists the steps to take in order.
Social Security: sometimes taxable
Whether Social Security is taxable depends on your combined income, which is your adjusted gross income, plus tax-exempt interest and half of your Social Security benefits. If it is below the base amount, none is taxed. Above it, up to 50 percent and then up to 85 percent of your benefits can be taxable, never more than 85 percent. SSDI benefits follow the same rules as retirement benefits. Our guide to whether Social Security is taxable shows the thresholds and an example.
Social Security sends Form SSA-1099 in January. The figure to use on the return is the net benefits in Box 5. If you want tax withheld, you can choose 7, 10, 12 or 22 percent of each payment, as our guide to withholding from Social Security explains. A few states tax Social Security as well, so check your state.
Benefits that are not taxed
Supplemental Security Income is not taxable, and neither are need-based payments such as TANF, SNAP, WIC, school meals and most housing and energy assistance. Veterans' disability and education benefits, workers' compensation for a work injury and the child support you receive are not income either. The refund from a credit like the Earned Income Tax Credit or the Child Tax Credit is not income, though your income decides how much credit you get.
A person who receives only these benefits may not need to file a federal return at all. Filing can still be worthwhile, though, since it is the way to claim the Earned Income Tax Credit and other refundable credits. Our guide to unclaimed tax refunds and free filing explains how to file at no cost.
Payments in between
Some payments fall between the clear cases. State paid family leave and state disability insurance programs have their own treatment, so read the form the state sends. Benefits from a private disability policy are taxable if your employer paid the premiums and generally not if you paid them with after-tax money. Retired pay from military service is taxable, though veterans' disability compensation is not, and most pensions are taxable. Back pay and legal settlements for lost wages are income. When a form arrives that you do not recognize, it usually means someone reported a payment to the IRS, and you should account for it on your return.
Forms to expect
Swipe sideways to see the whole table.
| Form | What it reports | When |
|---|---|---|
| Form 1099-G | Unemployment compensation and any state tax refund | January, from your state |
| Form SSA-1099 | Social Security retirement, survivor and disability benefits | January, by mail and in your my Social Security account |
| Form 1099-R | Pension and retirement account payments | January, from the payer |
| No form | SSI, SNAP, WIC, TANF, Medicaid | Not reported, since they are not income |
Match each form to your records before you file, since an error is easier to fix with the sender than after the return is in. If a form never arrives, you can usually get a copy online from the state agency or your my Social Security account, and a missing form does not excuse leaving the income off.
Do you have to file?
Whether you must file depends on your filing status, your age and your total income, and the thresholds change each year. A person whose only income is nontaxable benefits such as SSI or SNAP generally does not have to file. A person with unemployment or taxable Social Security in the same year as wages may. Even when filing is not required, it can be worth it: a return is how you claim the Earned Income Tax Credit and get back tax withheld from your pay. Free help exists through the IRS Free File program and the Volunteer Income Tax Assistance program, and our guide to unclaimed tax refunds explains where to find it.
State taxes follow different rules
Everything above describes the federal return. States set their own rules, and the answers differ. Some states with an income tax do not tax unemployment compensation, and most states do not tax Social Security, though a small number do. A state with no income tax does not tax either. Check your state revenue department's website, or ask a tax preparer, before you assume the federal answer applies to your state return.
Paying as you go
A taxable benefit is easiest to handle when the tax is paid little by little. You can ask the payer to withhold from unemployment and from Social Security, or increase the withholding on your job or pension. If you have other income with no withholding, you can make estimated payments each quarter. Paying at least 90 percent of this year's tax, or 100 percent of last year's, generally avoids an underpayment penalty, with a higher share for people with high incomes.
When a benefit that is not taxed still counts
Taxable and countable are different questions. A benefit can be free of tax and still count as income for another program. Social Security that is not taxable is added back when the Marketplace figures your premium tax credit, and unemployment pay counts for SNAP and Medicaid. Our guide to premium tax credit repayment explains the Marketplace side.
The reverse also happens. SSI is not taxed, but it is counted in rules that decide other help, and some benefits are excluded from a program's income test even though they are taxable. Report each benefit to each program the way that program asks.
Example (hypothetical): a layoff and a smaller tax bill than feared
A man earns $30,000 in the first half of a year, is laid off and collects $9,000 in unemployment for the rest of it. His Form 1099-G shows $9,000, and his return shows about $39,000 of income. He asked for 10 percent withholding from each payment, so $900 has already been paid toward the tax on those benefits, and the withholding from his paychecks earlier in the year covers most of the rest. He owes a small balance when he files. Had he not asked, the tax on the $9,000 would have come due all at once in April.
Questions about taxes on benefits
Do I have to file a return if I only receive SSI?
Usually not, because SSI is not taxable income. You might file anyway to claim a refundable credit if you also have earnings, and a tax preparer can tell you whether it is worth it.
Will my Social Security be taxed if it is my only income?
Usually not. Social Security is taxed only when your combined income passes the base amount, which a person with only a modest benefit usually does not reach.
Where do I find my SSA-1099 if I lost it?
You can view and print a replacement Form SSA-1099 in your my Social Security account after the forms are issued, or ask Social Security to mail one.
Is a lump-sum back payment taxed all at once?
A back payment of Social Security or SSDI can be taxed in the year you receive it, but a special rule lets you figure the tax as if it had been paid in earlier years. Ask a tax preparer how to use it.
What this table cannot cover
Tax law has exceptions, states differ, and the IRS decides how a benefit applies to your return. This is general information and not tax advice. A free tax clinic or a tax preparer can look at your records.
Official sources
Before you file
List every benefit you received this year, check each against the table and collect Forms 1099-G and SSA-1099. If any are taxable, ask about withholding for next year so the tax is paid a little at a time.
