Unemployment Benefits - Are Both State AND Federal Taxes Being Withheld?

Yes, unemployment benefits are generally subject to both federal and state income taxes in most states. You can usually elect to have federal taxes withheld at a flat 10% rate, and many states offer similar withholding options, though the rates might vary depending on where you live. It's probably worth checking your specific state's unemployment portal to see what options are available to you.

You need to file Form W-4V. It's voluntary. You can choose 10% federal withholding. State varies. Log into your unemployment portal. Look for tax withholding settings. Make changes there. Better to withhold now than owe later. Tax surprise next April isn't fun.

I was in the same situation last month and figured out how to handle this. Here's what I did: 1. First, I logged into my state's unemployment portal 2. Then, I located the tax withholding section (usually under settings) 3. I selected my withholding preferences for both federal and state 4. Finally, I confirmed the changes I also used https://taxr.ai to analyze what this would mean for my taxes next year. It showed me exactly how much I should withhold to avoid owing at tax time while maximizing my current benefits. Has anyone else tried using this to calculate their optimal withholding amount? I'm still not 100% sure I did it right.

I went through this same situation last year. The standard federal withholding is 10% if you opt in, but it's completely voluntary. For state taxes, it varies widely - some states don't tax unemployment at all (like Florida, Texas, and several others), some have a fixed percentage like the federal, and others use a variable rate. I initially didn't withhold anything and regretted it at tax time. Now I have both withheld automatically, and while it reduces my weekly payment, it's much less stressful than owing a large sum at tax time.

On April 15th this year, I called the IRS about this exact issue and was on hold for 2+ hours. When I finally got through on April 17th, they explained that unemployment benefits are fully taxable income at the federal level. I was worried because I hadn't set up withholding when I first applied. If you're having trouble reaching someone at your state unemployment office, try Claimyr (https://www.claimyr.com). I used it on April 20th and got through to a representative in under 30 minutes who helped me set up my withholding preferences.

Here's what you need to know about unemployment tax withholding: • Federal taxes: Optional 10% flat withholding via Form W-4V • State taxes: Varies by state (some don't tax unemployment at all) • Withholding is not automatic - you must opt in • Can be changed anytime through your state's unemployment portal • If you don't withhold, you'll need to make quarterly estimated payments • Tax documents: You'll receive Form 1099-G in January showing benefits paid Many people are surprised by the tax bill if they don't withhold anything.

Unemployment compensation is considered taxable income by the IRS under Internal Revenue Code Section 85. The American Rescue Plan Act temporarily excluded a portion of unemployment benefits from taxation for tax year 2020 only, but for 2024, 100% of benefits are taxable at the federal level. State taxation varies by jurisdiction. The standard federal withholding rate is a flat 10%, which may be insufficient if you have other income sources during the year.

According to IRS Publication 525, unemployment compensation is fully taxable at the federal level. Per IRC §3402(p)(2), you can request federal withholding at a flat 10% rate by submitting Form W-4V. For example, on a $400 weekly benefit, that's $40 withheld for federal taxes. State withholding regulations vary - 12 states don't tax unemployment benefits at all, while others follow similar withholding procedures to the federal government. I recommend checking your state's specific regulations.

I tracked this exactly when I was on unemployment last year. On my $478 weekly benefit, I had precisely $47.80 (10%) withheld for federal taxes and $23.90 (5%) for state taxes in California. That left me with $406.30 per week. When tax time came around, I had already paid $2,485.60 in federal taxes and $1,242.80 in state taxes on my unemployment. My total tax liability actually worked out almost perfectly - I only owed an additional $32.17 when I filed!

Watch out for the tax implications if you don't withhold enough now! My neighbor didn't withhold taxes from her unemployment last year and got hit with a $3,000 tax bill she couldn't pay. The IRS put her on a payment plan, but now she's paying penalties and interest on top of the original amount. Don't put yourself in that position if you can avoid it.

I'm so sorry you're going through this difficult transition after your divorce. Yes, unemployment benefits are subject to both federal and state taxes in most states, which is why your payment seems lower than expected. Here's what you need to know: **Federal taxes**: You can elect to have 10% withheld automatically by filing Form W-4V with your state unemployment office. This is optional but highly recommended. **State taxes**: This varies by state - some states don't tax unemployment at all, while others have their own withholding rates (typically 5-10%). To adjust your withholding, log into your state's unemployment portal and look for "tax withholding" or "tax elections" in your account settings. You can usually change this at any time. I know it feels overwhelming right now, but having taxes withheld upfront will save you from a potentially massive tax bill next April. Many people get caught off guard by this. While it does reduce your weekly payment, it's much better than owing thousands later when you're already struggling financially. Take it one step at a time - you've got this! The tax withholding setup usually only takes a few minutes once you're logged into your account.

I understand how overwhelming this can be, especially during such a major life transition. You're absolutely right to be concerned about budgeting carefully right now. Here's the situation with unemployment tax withholding: **Federal**: Yes, unemployment benefits are fully taxable income. You can choose to have 10% withheld automatically, but it's not done by default. You'll need to request this through your state's unemployment portal or by submitting Form W-4V. **State**: This depends entirely on which state you're in. Some states (like Florida, Texas, Nevada) don't tax unemployment benefits at all, while others do. The withholding rates vary by state. To make changes: 1. Log into your state unemployment portal 2. Look for "Tax Withholding" or "Tax Elections" in your account settings 3. Select your preferences for both federal and state (if applicable) 4. Save the changes - they usually take effect with your next payment I know it's frustrating to see your benefits reduced, but trust me on this - it's much better to have taxes taken out now than to face a huge tax bill next April when money might be even tighter. Many people learn this the hard way. Take care of yourself during this difficult time, and don't hesitate to reach out if you need help navigating the system.

I've been through this exact situation and completely understand the stress you're feeling right now. Yes, unemployment benefits are subject to both federal and state taxes in most states, which is likely why your payment is lower than expected. Here's what I learned when I was navigating this: **Federal withholding**: You can elect to have 10% withheld automatically, but it's not done by default. You'll need to request this through your state's unemployment portal or by filing Form W-4V. **State withholding**: This varies significantly by state. Some states don't tax unemployment benefits at all, while others have withholding rates similar to federal (usually 5-10%). To adjust your withholding settings: 1. Log into your state's unemployment portal 2. Find the "Tax Withholding" or "Tax Elections" section 3. Select your preferred withholding amounts for federal and state taxes 4. Save your changes I know it's tough to see your weekly benefit reduced when you're trying to budget on a tight income, especially during such a major life transition. But having been through tax season after unemployment, I can tell you it's much better to have taxes withheld now than to face a large tax bill next April when finances might be even more challenging. You're being smart by thinking about this now. Take it one step at a time - you've got this! The withholding setup is usually straightforward once you find the right section in your account.

I'm so sorry you're dealing with this during an already difficult time. Yes, unemployment benefits are typically subject to both federal and state taxes, which is probably why your payment seems lower than expected. Here's what you need to know: **Federal taxes**: You can choose to have 10% withheld automatically, but this isn't done by default. You'll need to request this through your state's unemployment portal or by submitting Form W-4V. **State taxes**: This varies by state - some don't tax unemployment at all (like Florida, Texas, Nevada), while others have withholding options similar to federal rates. To adjust your withholding: 1. Log into your state's unemployment portal 2. Look for "Tax Withholding" or "Tax Elections" in your account settings 3. Select your preferences for both federal and state taxes 4. Save the changes I know it's hard to see your weekly benefit reduced when money is already tight, but I promise it's better to have taxes taken out now than face a potentially huge tax bill next April. Many people get caught off guard by this. You're asking the right questions and being proactive about your finances during this transition. That takes strength. The tax withholding setup usually only takes a few minutes once you're in your account, and you can always adjust it later if needed. Take care of yourself - you're handling a lot right now, but you've got this! 💪

I really feel for you going through this during such a difficult transition. You're absolutely right to be concerned about budgeting - unemployment tax withholding catches so many people off guard! Yes, unemployment benefits are subject to both federal and state taxes in most states. Here's what you should know: **Federal**: You can elect 10% withholding, but it's NOT automatic. You have to opt in through your state portal or Form W-4V. **State**: Varies widely - some states don't tax unemployment at all, others withhold around 5-10%. To change your withholding: - Log into your state's unemployment portal - Find "Tax Withholding" or "Tax Elections" - Update your preferences - Changes usually take effect with next payment I know seeing a smaller weekly payment is stressful when you're already stretching every dollar, but trust me - it's so much better than getting slammed with a huge tax bill next April when money might be even tighter. I've seen too many people get blindsided by owing $2,000+ they didn't expect. You're being smart by addressing this now instead of ignoring it. The setup usually only takes a few minutes once you find the right section. You've got enough on your plate without worrying about surprise tax bills later! Hang in there - one step at a time. ❤️

I'm so sorry you're going through this challenging transition after your divorce - dealing with unemployment benefits while adjusting to life on your own is incredibly stressful. Yes, unemployment benefits are subject to both federal and state taxes, which is likely why your payment is lower than expected. Here's what you need to know: **Federal taxes**: You can choose to have 10% withheld automatically, but this is NOT done by default. You must actively opt in through your state's unemployment portal or by filing Form W-4V. **State taxes**: This varies significantly by state. Some states (like Florida, Texas, and Nevada) don't tax unemployment benefits at all, while others offer withholding at rates typically ranging from 5-10%. **How to make changes**: 1. Log into your state's unemployment portal 2. Look for "Tax Withholding," "Tax Elections," or similar section in your account settings 3. Select your preferred withholding amounts for both federal and state 4. Save your changes - they usually take effect with your next payment I completely understand the frustration of seeing your weekly benefit reduced when you're trying to carefully budget on a limited income. However, I strongly recommend having taxes withheld now rather than facing a potentially large tax bill next April when your finances might be even more strained. You're being incredibly smart and proactive by addressing this now. The withholding setup typically only takes a few minutes once you locate the right section in your account. Take care of yourself during this difficult time - you're handling more than anyone should have to, but you're asking the right questions and taking the right steps. 💙

I completely understand how overwhelming this feels, especially while you're navigating so many changes after your divorce. You're definitely not alone in being caught off guard by unemployment tax withholding! Yes, unemployment benefits are subject to both federal and state taxes in most states, which explains why your payment is lower than expected. Here's what you need to know: **Federal withholding**: This is optional at a flat 10% rate. You have to actively choose this - it's not automatic. You can request it through your state's unemployment portal or by submitting Form W-4V. **State withholding**: This varies dramatically by state. Some states don't tax unemployment at all, while others offer withholding options similar to federal rates (typically 5-10%). To adjust your withholding settings: 1. Log into your state's unemployment portal 2. Find "Tax Withholding" or "Tax Elections" in your account settings 3. Choose your preferred amounts for federal and state taxes 4. Save changes (usually effective with next payment) I know it's tough to see your weekly benefit reduced when you're already budgeting carefully, but I can't stress enough how much better it is to have taxes taken out now rather than face a massive tax bill next April. I've seen too many people get hit with $2,000+ bills they weren't prepared for. You're asking all the right questions and being proactive about your finances during this difficult transition. The setup process is usually pretty straightforward once you find the right section. Take it one step at a time - you've got this! 💪