Do I pay taxes on unemployment benefits from NYS Department of Labor?

Yes, unemployment benefits are federally taxable income. NYS doesn't tax unemployment benefits, but the IRS does. You can have 10% federal tax withheld when you file your weekly claims - there's an option for this on the my.ny.gov portal. If you haven't been doing this, you should start setting aside money now.

Yes, unemployment benefits are considered taxable income by both federal and state tax authorities. You'll receive a 1099-G form from NYS Department of Labor in January showing how much you received. The good news is you can choose to have taxes withheld from your weekly payments - there's an option in your my.ny.gov account to withhold 10% for federal taxes.

I learned this the hard way last year - owed $1,800 in taxes on my unemployment! Now I always have the 10% withheld. When you're filing your weekly claim, look for the tax withholding section before you submit. It's usually near the end of the form.

I learned this the hard way last year - owed like $800 in taxes because I didn't have anything withheld from my UI payments. Definitely set up the withholding if you can afford the smaller weekly amount. You can also make quarterly estimated payments if you prefer.

If you can't get through to NYS Department of Labor to change your withholding settings, I had luck using claimyr.com to actually reach an agent by phone. They have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Way better than sitting on hold for hours just to get hung up on.

wait so NY state doesnt tax unemployment but federal does?? that seems backwards lol

THE TAX SYSTEM IS SO CONFUSING! Why don't they just automatically withhold taxes like they do with regular paychecks? Now I'm worried I owe thousands and thousands of dollars because nobody told me this when I filed my claim!

You'll get a 1099-G form from NYS Department of Labor in January showing how much you received in benefits. Make sure to save that for tax filing. And yeah, definitely start the withholding if you haven't already.

Wait so even though I'm already struggling financially they want to tax what little help I'm getting?? This system is so messed up. I can barely pay rent with what NYS Department of Labor gives me and now I have to worry about owing taxes too??

If you're having trouble reaching someone at NYS Department of Labor to set up withholding, I used a service called Claimyr (claimyr.com) that actually got me through to a real person. They have a video demo at https://youtu.be/qyftW-mnTNI showing how it works. Saved me hours of trying to call myself and getting busy signals.

just a heads up the 1099G sometimes has errors so double check it against your payment history when you get it in january

Thanks everyone for all the helpful info! I had no idea unemployment was taxable - definitely going to set up that 10% withholding ASAP. Better to get less each week than get hit with a big tax bill next year. Really appreciate this community having each other's backs with this stuff!

Just want to add - if you're really tight on money and can't afford the 10% withholding right now, at least try to set aside whatever you can each week. Even $20-30 per payment adds up and will help when tax time comes. I made the mistake of not saving anything my first time on unemployment and it was really stressful trying to come up with the money I owed. Also, if your income is low enough you might qualify for free tax prep services through VITA when filing season comes around.