How to Remove Federal Tax on State Unemployment
- 1). Look through the paperwork that you received when you filed your initial claim for unemployment compensation. Many states have their own document that serves as a substitute W-4. This form will usually include an option to waive tax withholding on benefits paid. If you didn't mail the W-4 form back to the state, the IRS instructions will be followed and income tax will be withheld automatically.
- 2). Contact your state unemployment office (see Resources). Let the representative know you want to stop federal withholding for your unemployment benefits. If you have the form, ask the representative for the office fax number. Fill the form out and fax it to your unemployment office.
- 3). If you don't have the substitute W-4 for from the state, ask the representative if the form is available on the agency's website. If not, ask him to e-mail the form to you. Complete the form and fax or mail it in.
- 4). If your state doesn't use a substitute W4, use IRS Form W-4V instead (see Resources). Complete the W-4V and check line 7, "I want to stop withholding federal tax from my payments." Fax or mail the form to your unemployment office.
