Are Federal Income Taxes or Social Security Taxes withheld from STC benefits?
Are STC benefits taxable income? Social Security taxes are not withheld from STC or UC benefits. The employee may choose to have Federal Income Tax deducted from unemployment compensation benefits. Each January, Form 1099-G, Statement of Unemployment Compensation Payments Issued, is mailed to each individual who received benefits during the preceding calendar year. The 1099-G shows the amount of benefits issued during the year. This amount must be reported as income on each person’s Federal Income Tax Return.