Laid off mid-year: unemployment and student loan interest
A single logistics coordinator lost his job in July and collected unemployment for the rest of the year. Unemployment compensation on Schedule 1, withholding from two sources, and the student loan interest deduction.
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Taxpayer facts
Who this is and what their year looked like.
Rafael is single and lives in Orlando. He worked as a logistics coordinator until his position was eliminated at the end of July 2025.
He collected state unemployment benefits from August through December and asked the state to withhold 10% for federal income tax. He is still paying off his student loans and takes the standard deduction.
Source documents
The 4 documents you will prepare the return from: W-2 (Wage and Tax Statement), 1099-G (Certain Government Payments), 1099-INT (Interest Income), 1098-E (Student Loan Interest Statement).
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Objectives
What a correct return should capture.
- File as Single and report the W-2 wages and the credit union interest.
- Report the unemployment compensation from Form 1099-G box 1 on Schedule 1 and carry Schedule 1 additional income to Form 1040.
- Enter the student loan interest from Form 1098-E. Check the 2025 limit and whether his modified AGI is in the phase-out range, then take the deduction on Schedule 1 Part II.
- Work out AGI and taxable income with the standard deduction, and the tax from the Tax Table.
- Add up federal withholding from both the W-2 and the 1099-G on Form 1040 line 25, and reconcile to the refund or balance due.
- Note that unemployment compensation is fully taxable federally in 2025, and that Florida has no state income tax.
Check your work
The answer key and the complete return, the way a real client receives it: the 1040 and its schedules, the workpapers behind every number, and the signature forms.
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