Lost Your Job in CT? Tax Checklist

Lost your job in Connecticut? This tax checklist covers how unemployment benefits, severance and retirement withdrawals are taxed, and what to do before year-end. Checked November 3, 2026.

For general education only. Not tax, legal, insurance, or investment advice, and not a promise of any result. Tax rules and due dates change, so confirm with the IRS (irs.gov), the CT Department of Revenue Services (portal.ct.gov/DRS) or your town before you act, and ask your tax preparer about your own situation.

What changes for your taxes

Unemployment benefits are taxable income. You'll get Form 1099-G. You can choose to have federal income tax withheld (Form W-4V) or make quarterly estimated payments (IRS Topic 418).
Severance and final paychecks are wages, with the usual withholding.
Cashing out a 401(k) or IRA early usually adds a 10% additional tax before age 59½, unless an exception applies (IRS). Talk with your tax preparer first.

What to do before December 31, 2026

To do Decide whether to have tax withheld from unemployment benefits, so you don't face a surprise bill in April.
To do Look at health coverage now. Losing job-based coverage is a qualifying life event, and Access Health CT generally gives you 60 days, with proof due within 30 days (Access Health CT).
To do Starting freelance or gig work in the meantime? Set aside money for self-employment tax and see IRS estimated taxes.
To do Keep your final pay stub, your severance agreement and your Form 1099-G.

The Connecticut side

Connecticut's return starts from your federal adjusted gross income, so taxable unemployment benefits flow into your CT return too. Plan for CT tax on them.

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Frequently asked questions

Is unemployment taxable in Connecticut?

Unemployment compensation is taxable on your federal return, and your Connecticut return starts from federal adjusted gross income. Plan for both federal and CT tax on those benefits.

Can I have taxes taken out of my unemployment checks?

For federal tax, yes. You can request withholding with Form W-4V, or make quarterly estimated payments instead.

Is there a penalty for withdrawing from my 401(k) after losing my job?

Early withdrawals before 59½ generally carry a 10% additional tax unless an exception applies, for example separation from service in or after the year you reach 55 for workplace plans. Ask your tax preparer before withdrawing.

Sources (Checked November 3, 2026)

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