When you receive unemployment insurance benefits in New Jersey, it's important to know how the taxes related to those payments work in order to meet your tax obligations correctly.

1. State taxes vs. federal taxes
   Unemployment insurance benefits in New Jersey are not subject to state taxes, meaning the state does not tax this type of income.
   However, these benefits are considered income for federal tax purposes, so you must include them in your federal income tax return.
   
   
2. Federal tax withholding
   When you apply for unemployment benefits, you have the option to request that a percentage, up to 10% of each weekly payment, be withheld for federal income tax to help cover your tax liability at the end of the year. This withholding can be selected when you file your claim or can be changed later by submitting a Change of Withholding Status Request to the New Jersey Department of Labor and Workforce Development.
   
   
3. Form 1099-G
   At the end of the fiscal year, if you received unemployment benefits, the Department of Labor will provide you with a Form 1099-G, which shows the total benefits you received and any federal income tax withheld. That form is also sent to the Internal Revenue Service (IRS).
   
   This document is essential to correctly complete your federal tax return, as you will need to report the total amount of benefits received as part of your income.
   
   
4. How to obtain or change withholding
   You can choose to have federal taxes withheld when you apply for benefits, or you can change your withholding status later by submitting the “Request for Change in Withholding Status” form directly to the New Jersey Department of Labor and Workforce Development.

If you need help understanding how to report your benefits or manage your taxes, consider consulting a tax professional or using services that help with tax return preparation.