Are nonprofits exempt from federal unemployment tax - does this affect my NYS Department of Labor claim?
I just got laid off from a nonprofit organization where I worked for 2 years. My former boss mentioned something about nonprofits being exempt from federal unemployment tax and now I'm worried this might affect my ability to file for unemployment benefits through NYS Department of Labor. Does anyone know if working for a tax-exempt nonprofit impacts your eligibility for UI benefits? I'm really confused about how this works and whether I can even file a claim.
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Keisha Williams
You can definitely file for unemployment! The nonprofit's tax status doesn't prevent you from getting benefits. Most nonprofits in NY actually do pay into the unemployment system, they just have different options for how they fund it. Some pay the standard UI taxes, others reimburse the state directly for benefits paid out. Either way, you're covered as long as you meet the other eligibility requirements.
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PixelPioneer
•That's such a relief! I was panicking thinking I might not be eligible. Do I file the same way as everyone else through the NYS Department of Labor website?
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Paolo Rizzo
yeah i worked at a food bank for 3 years and got unemployment when they had budget cuts. no issues at all filing my weekly claims
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Amina Sy
The confusion comes from federal vs state systems. Nonprofits can be exempt from FUTA (Federal Unemployment Tax Act) but they still participate in state unemployment programs. In New York, nonprofit employers with 4+ employees must provide unemployment coverage. You file through my.ny.gov just like any other worker. Make sure you have your separation notice and wage information ready when you apply.
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Oliver Fischer
•This is really helpful info! I had no idea there was a difference between federal and state unemployment taxes. Makes so much more sense now.
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Natasha Ivanova
I spent weeks trying to reach someone at NYS Department of Labor to ask about this exact situation when I got laid off from my nonprofit job last year. The phone lines were constantly busy and I kept getting disconnected. Finally found this service called Claimyr (claimyr.com) that helps you get through to actual NYS Department of Labor agents. They have a video demo at https://youtu.be/qyftW-mnTNI showing how it works. Ended up being super helpful for getting my questions answered quickly instead of waiting on hold forever.
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PixelPioneer
•Thanks for the suggestion! I might need to try that if I run into issues with my claim.
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NebulaNomad
Just want to add that even if your nonprofit was reimbursing rather than paying standard UI taxes, it doesn't matter to you as the employee. Your benefits get processed the same way. The only thing that might be different is if the organization contests your claim, but that's rare with legitimate layoffs. Good luck with your application!
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