Unemployment benefits are considered taxable income which means that unemployed workers need to pay taxes on the unemployment compensation they received last year.
Here's information on taxable unemployment benefits, including how to report unemployment income, unemployment tax withholding, and taxes on supplemental unemployment compensation.
Some of the expenses you incurred while job searching last year are deductible and they may help offset the tax you owe on unemployment. If you looked for a job in the same line of work you're currently in, many of your expenses like phone calls, the costs of preparing and copying your resume, and career counseling are deductible.
These job search tax deduction tips will help you make sure that you get all the tax benefits you're entitled to.