During the coronavirus pandemic, 16.8 million Americans filed for unemployment benefits. According to Business Insider, these benefits are considered income to the IRS, meaning it’s taxed. You can either request to have taxes withheld or pay estimated quarterly payments. For withholding taxes you have to file Form W-4V and they will take out 10 percent for federal income taxes. After filing the form, they will also take out a portion for state taxes.