Unemployment compensation generally includes any amounts received under the unemployment compensation laws of the United States or of a state. It includes unemployment insurance benefits and benefits paid to you by a state, commonwealth, or the District of Columbia from the Federal Unemployment Trust Fund. It also includes railroad unemployment compensation benefits, but not worker's compensation.

Supplemental unemployment benefits received from a company-financed fund are not unemployment compensation for this purpose. They are fully taxable as wages.

Unemployment benefits from a private fund to which you voluntarily contribute are taxable only if the amounts you receive are more than your total payments into the fund. This taxable amount is not unemployment compensation; it is reported as other income on Form 1040.

If you received unemployment compensation during the year, you should receive Form 1099-G showing the amount you were paid. Any unemployment compensation received during 1997 must be included in your income.

If you received unemployment compensation, you may be required to make estimated tax payments. However, you may have federal income tax withheld. For more information, see Form W-4V, Voluntary Withholding Request. You can order form W-4V by calling 1-800-829-3676. See Topic 355 for additional information on estimated tax.

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