Do you pay taxes on an unemployment check?

Unemployment benefits are normally fully taxable on your federal return, they may be tax exempt on certain state returns.

However, the first $2400 of benefits earned per person in 2009 is exempt from federal tax.

Withholding from your benefits is optional. But even though you might not choose to have taxes withheld, you will still have to calculate how much you owe when you fill out your Form 1040 at the end of the year.