Taxability of Benefits

Unemployment compensation is subject to federal income tax and exempt from Montana income tax. This includes benefits received under regular Unemployment Insurance, any special unemployment compensations authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and the Lost Wages Assistance program.

The Department of Labor & Industry is unable to provide tax advice. If you have additional questions concerning your tax situation, we recommend that you consult a tax advisor.

Regular UI
For recipients of regular Unemployment Insurance, claimants can opt to have 10% withheld for their federal tax liability. Regular UI claimants can select or change their withholding preference in their MontanaWorks by accessing the “Tax Withholding” tile on their MontanaWorks dashboard.

PUA, LWA, and IPA
The option to have taxes withheld was not available for Pandemic Unemployment Assistance (PUA), Lost Wages Assistance (LWA), and Interim Pandemic Assistance benefits.

Income Tax Reporting
In January 2021, claimants will receive an IRS 1099-G form from the Montana Department of Labor & Industry. It will show the amount of unemployment compensation received during 2020 and, if applicable, any federal income tax withheld. Please verify your address on file is correct, so you receive your 1099-G promptly.

For regular UI, a claimant will have the option of downloading the 1099-G in your MontanaWorks account. 1099-Gs from 2019 or before are not available.

Recipients who return to work before the end of the year can use the IRS Tax Withholding Estimator to ensure they are having enough tax taken out of their pay. https://www.irs.gov/individuals/tax-withholding-estimator This can help workers avoid or lessen their year-end tax bill or estimate the refund they want. If you receive a bill for an overpayment of UI or PUA benefits, you will need to report that information on your taxes. Please watch your mail for direction on how overpayments and repayments should be reported. For additional questions, please contact the Overpayment Unit at (406) 444-5434.

General Taxability Questions

Yes. Unemployment benefits are considered compensation and subject to federal taxes. This includes benefits received under regular Unemployment Insurance, any special unemployment compensations authorized under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Lost Wages Assistance program and the Interim Pandemic Assistance program.
Last updated 01/28/21

You will receive Form 1099-G from DLI that will show the total amount of unemployment income you need to report.
Last updated 09/15/20

For regular UI claimants, access the “Tax Withholding” tile on your MontanaWorks dashboard. You have the choice to select “I want federal income tax withheld from my unemployment compensation at a rate of 10% each payment.” PUA claimants do not have the option of having tax withheld.
Last updated 09/15/20

For regular UI claimants, access the “Tax Withholding” tile on your MontanaWorks dashboard. You have the choice to update your withholding status. PUA claimants do not have the option of having tax withheld.
Last updated 09/15/20

The Lost Wages Assistance and Interim Pandemic Assistance programs were separate programs that processed funding independent of regular UI or PUA benefits.

The 1099-G you receive encompasses both UI and PUA.
Last updated 01/28/21

DLI reports the total amount of unemployment compensation paid to you and others on your behalf for the year, including any Child Support and taxes, to the IRS even if an overpayment was later established. You are responsible for deducting any cash repayments you have sent to the Unemployment Insurance Division towards the overpayment. The net result is the total amount of unemployment compensation received. Refer to instructions in your Form 1040 instruction booklet.
Last updated 09/22/20

If you repaid any of your overpayment in 2020, subtract the amount you repaid from the total amount received as shown on your 1099-G. Enter the result on the appropriate line of your 1040 tax form.
Last updated 09/22/20

For general claims questions please call the Claims Processing Center at 406-444-2545.

1099-G General Questions: 406-444-2556

Report Fraud and Identity Theft: 406-444-0072
Last updated 01/28/21

1099-G Questions

Claimant Letter on the 1099-G Form

Information on UI Fraud and Identity Theft

If you did not file for UI and received a 1099-G, you are likely a victim of ID Theft. Please contact the DLI fraud hotline at (406) 444-0072 8am-5pm M-F. If you do not contact DLI, you could end up with taxes owed.
Last updated 01/28/21

The 1099-G is a tax form for Certain Government Payments. The Montana Department of Labor & Industry (DLI) Unemployment Insurance Division sends 1099-G forms to individuals who received Unemployment Insurance (UI) or Pandemic Unemployment Assistance (PUA) payments. Your 1099-G will include all payments received under regular, pandemic and additional benefit UI programs.
Last updated 01/28/21

  1. Go to MontanaWorks.gov Login or register to create an account.
  2. Navigate to Manage Claim Details.
  3. Enter your PIN and Submit. Create a PIN if you do not have one.
  4. Navigate to the 1099 Tax Form module.
  5. If you have a 1099, select Access 1099 . You may download and print.

Last updated 01/28/21

The 1099-G is a tax form for Certain Government Payments. The Montana Department of Labor & Industry Unemployment Insurance Division sends 1099-G forms to individuals who received Unemployment Insurance (UI) or Pandemic Unemployment Assistance (PUA) payments. Your 1099-G will include all payments received under regular, pandemic and additional benefit UI programs.

Every January, UI sends a 1099-G form to people who received unemployment benefits during the prior calendar year. You will need this form to file your taxes. Taxes were not withheld from PUA, IPA or LWA, the agency did not have the option to do so.

For tax filing information, call the IRS at (800) 829-1040 or visit their website at irs.gov. It may be helpful to have copies of your previous year’s tax records available before contacting the IRS.
Last updated 01/28/21

You may have changed your withholding status at some point while you were receiving benefits. Many claimants switch back and forth between having taxes withheld. Also, the Lost Wages Assistance, Interim Pandemic Assistance and Pandemic Unemployment Assistance programs did not have the option of withholding for taxes.
Last updated 01/28/21

No later than January 31, you will be mailed an IRS Form 1099-G showing the total benefits paid to you for the prior year and the federal income taxes withheld. It will be sent to your last known address, so keep your address current with the Montana Department of Labor & Industry. Form 1099-G will also be available in your MontanaWorks account by this date.
Last updated 09/15/20

IRS Notice on Taxability of Unemployment Benefits

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