Skipping tax withholding on DEO benefits - am I making a huge mistake?

Yeah I skipped the tax withholding last year and TOTALLY regretted it!! Ended up owing almost $1,500 to the IRS when I filed. The thing is unemployment benefits are 100% taxable income but a lot of people dont realize it. If ur only on benefits for 2-3 months maybe it wont be as bad but still... tax surprise is NO FUN!!

Financial advisor here. My recommendation is to always have the taxes withheld upfront. The federal withholding rate for unemployment benefits is 10%, which is actually lower than what many people's actual tax rate will be. If you're only on unemployment for 2-3 months as planned, you're looking at about $275 x 10 weeks = $2,750 total benefits, so withholding would be around $275 total. If you absolutely cannot spare that money right now, another option would be to set aside a portion yourself each week in a separate savings account. But most people find that difficult to maintain discipline with when finances are tight. Remember that unemployment compensation is fully taxable as ordinary income on both your federal and state returns. The DEO will send you a 1099-G form by January 31, 2026 showing the total benefits paid and any federal income tax withheld.

I MADE THIS MISTAKE LAST YEAR AND REGRET IT SO MUCH!!!! I thought I was being smart by getting more money each week but then got hit with a $900 tax bill I wasn't prepared for. DON'T DO IT!!! Just have the taxes taken out now, it's way less painful than a big bill later when you might not have the money set aside.

my cousin didnt withhold n was fine but i think he made like almost no money that year so maybe it depends on your situtation?

Having dealt with hundreds of unemployment cases, I strongly advise having taxes withheld. While it might seem beneficial to get the full amount now, most claimants find themselves unprepared for the tax bill. The Florida DEO system makes it fairly simple to set up withholding - just select the option in your CONNECT account under payment method preferences. Also, a tip for reaching DEO if you need to change this setting after initial setup: I've had clients use Claimyr (claimyr.com) to get through to agents quickly instead of waiting hours on hold. They have a video demo at https://youtu.be/UzW_hbUy-ss?si=zORd51jeq1GX5Ldj that shows how the process works. Much easier than trying to get through on your own, especially with their current call volumes.

I'm going to go against the grain here. I didn't withhold taxes from my unemployment last year because I NEEDED every penny to survive. Yes, I had to pay taxes on it later, but having that extra money each week kept me from getting evicted. Sometimes you have to make tough choices. If you're facing immediate financial hardship, taking the full amount now might be necessary even if it means a tax bill later. Just be aware it's coming and try to save if your situation improves.

Wait anybody know if we still get the tax form if we earned less than $10,000 in unemployment benefits? I'm confused because I thought there was some minimum before they even send the tax forms?

lol my brother did this and then complained to me for months when he got hit with a biggg tax bill. dont be like my brother.

Btw just to add one more thing - if you do decide not to withhold, you can make estimated quarterly tax payments to the IRS to avoid a penalty for underpayment. That's what I did when I was on unemployment. It's a bit more work but gives you more flexibility with your money throughout the year.