The choice to withhold taxes is yours, and it depends on your total income for the year

Georgia allows you to request that 6% of your weekly unemployment benefit be withheld for federal income tax. This is optional — you do not have to withhold anything. Whether you should depends on whether you expect to owe federal income tax when you file your return, and whether you prefer to pay as you go or in a lump sum later.

If you have other income (from a job, self-employment, a pension, or investments), withholding from unemployment can prevent a large tax bill in April. If unemployment is your only income and you earn below the threshold where you owe federal tax, withholding means you will overpay and wait for a refund.

You decide this when you file your initial claim with the Georgia Department of Labor, and you can change your choice at any time by contacting them.

Key Takeaways

  • Withholding 6% from your Georgia unemployment benefit is optional and you control whether it happens.
  • You should withhold if you have other income during the year and expect to owe federal tax, because it spreads the payment across your benefit checks instead of owing it all in April.
  • You should not withhold if unemployment is your only income and your total earnings are below roughly $13,850 (the 2024 standard deduction for single filers), because you will overpay and get a refund.
  • You can change your withholding choice at any time by contacting the Georgia Department of Labor.
  • The 6% withholding is federal income tax only — it does not cover self-employment tax or state income tax.

When withholding makes sense: you have other income

If you are working part-time while collecting unemployment, or if you have a pension, rental income, or investment income, you likely owe federal income tax for the year. Withholding 6% from your unemployment benefit spreads that tax across your weekly checks instead of creating a surprise bill in April.

Example: You earn $20,000 from part-time work and receive $8,000 in unemployment benefits. Your total income is $28,000. You will owe federal income tax. If you withhold 6% from the $8,000 in benefits, you pay $480 across your benefit checks. Without withholding, you might owe $2,000 or more when you file, depending on your deductions and credits.

Withholding does not may provide you will not owe more in April — it depends on your exact income, deductions, and filing status — but it reduces the risk of a large bill.

When withholding does not help: unemployment is your only income

If unemployment is your only income for the year, you may not owe any federal income tax. The standard deduction for 2024 is $13,850 for single filers and $27,700 for married couples filing jointly. If your total income is below these amounts, you owe no federal tax.

If you withhold 6% anyway, you are sending money to the IRS that you do not owe. You will get it back as a refund when you file your return, but you will have waited months and had less money in your pocket while unemployed.

Example: You receive $10,000 in unemployment benefits and have no other income. Your total income is $10,000, which is below the $13,850 standard deduction. If you withhold 6%, you send $600 to the IRS. When you file your return, you owe $0 in tax and get the $600 back as a refund. You could have had that $600 when ready by not withholding.

How to request withholding when you file your claim

When you file your initial unemployment claim with the Georgia Department of Labor, you will see a question about federal income tax withholding. You can choose to withhold 6% or not. The choice is made during the claim process and appears on your claim form.

If you do not make a choice at that time, no withholding happens by default. You can add withholding later by contacting the Georgia Department of Labor by phone or through your online account.

Keep the confirmation of your withholding choice. You will need it when you file your tax return to account for the taxes already paid.

Changing your withholding choice mid-year

You are not locked into your initial choice. If you started without withholding and then took a part-time job, you can request withholding. If you chose withholding but then lost your other job and unemployment is now your only income, you can stop withholding.

Contact the Georgia Department of Labor to change your withholding. You can reach them through the Department of Labor website or by phone. Changes typically take effect on your next benefit payment.

If you change your withholding partway through the year, you may still owe or be owed money when you file your return. The withholding you did pay will be reported on your Form 1099-G, which you will receive in January.

What the 6% withholding covers and does not cover

The 6% withholding is federal income tax only. It does not cover state income tax, self-employment tax, or any other obligations.

Georgia does not have a state income tax on unemployment benefits, so you do not need to withhold for the state. However, if you have self-employment income (from gig work, freelancing, or a side business), you will owe self-employment tax on that income separately. Withholding from unemployment does not reduce that obligation.

When you file your return, you will report the withholding on your Form 1099-G and claim it as a payment toward your total federal tax liability.

Tracking your withholding for tax time

The Georgia Department of Labor will send you a Form 1099-G in January showing your total unemployment benefits and the amount of federal tax withheld. You will need this form to file your tax return.

Keep records of your weekly benefit payments and any withholding you requested. If you changed your withholding choice during the year, make a note of when the change took effect so you can verify the amount on your 1099-G is correct.

If the 1099-G shows an incorrect withholding amount, contact the Georgia Department of Labor to request a corrected form before you file your return.

Frequently Asked Questions

Can I withhold more than 6% from my unemployment benefits?

No. Georgia allows only the 6% federal withholding option. If you want to pay more in federal tax, you would need to make estimated tax payments to the IRS separately, which is uncommon for unemployment recipients.

If I withhold taxes, do I still have to file a tax return?

Not necessarily. If your total income is below the standard deduction and you have no other tax filing reason (like self-employment income), you may not have to file. However, if you withheld taxes, filing a return is the only way to get the refund of those taxes.

What happens if I do not withhold and owe taxes in April?

You will owe the full amount when you file your return. The IRS may charge interest and penalties if you owe a large amount. You can pay the bill when you file, set up a payment plan with the IRS, or request an extension to file (though this does not extend the time to pay).

Does withholding from unemployment affect my benefits amount?

No. Your weekly benefit amount is set by Georgia based on your prior earnings. The 6% withholding is taken from that amount, so you receive less cash, but your benefit amount itself does not change.

Can I request withholding if I am receiving unemployment from another state?

Each state has its own withholding rules. If you are receiving benefits from another state, contact that state's unemployment office about their withholding options. The rules and percentages vary by state.