Do I want taxes withheld from unemployment benefits in NY - confused about tax implications
I'm filling out my unemployment application on the NYS Department of Labor website and there's this question about whether I want federal taxes withheld from my benefits. I have no idea what to choose! I've never been on unemployment before and don't understand the tax implications. If I say yes to withholding, do they take out the standard amount? If I say no, am I going to owe a huge tax bill next year? Really need some guidance here because I don't want to mess this up.
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NebulaNova
This is actually a really important decision! NYS Department of Labor gives you the option to have 10% withheld for federal taxes. If you choose yes, they'll automatically deduct it from each weekly payment. If you choose no, you'll receive the full benefit amount but you'll owe taxes on all of it when you file your return. Most people choose to have it withheld so they don't get hit with a big tax bill later.
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Yara Sayegh
•So if I get $400 a week and choose withholding, I'd only receive $360? That makes sense actually - better than owing hundreds later.
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Keisha Williams
i didnt have any taxes taken out and ended up owing like $1200 when i filed. wish someone had told me to choose the withholding option when i first applied
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Paolo Conti
•Ouch! Can you change the withholding choice after you've already started claiming?
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Amina Diallo
You can actually change your tax withholding preference later if needed. Log into your my.ny.gov account and look for the tax withholding section under your claim details. However, I'd recommend choosing to withhold from the start - unemployment benefits are considered taxable income by both federal and state. The 10% federal withholding helps but you might still owe some depending on your total income for the year.
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Yara Sayegh
•Thank you! This is exactly the kind of practical advice I needed. Going to choose the withholding option.
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Oliver Schulz
Definitely withhold! I learned this the hard way my first time on unemployment. Also keep in mind that if you have trouble reaching NYS Department of Labor agents about this or other questions, 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. Really helpful when you need to talk to someone about your claim details.
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Natasha Kuznetsova
•Never heard of that service but honestly anything that helps get through to NYS Department of Labor is worth checking out. Their phone lines are impossible.
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AstroAdventurer
Just remember you'll also owe NY state taxes on unemployment benefits so even with federal withholding you might still owe something at tax time. But yeah definitely better to have something withheld than nothing!
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Diego Fisher
Great question! I went through this same confusion when I first applied. Here's what I learned: unemployment benefits are fully taxable as regular income. If you choose withholding, they take out 10% for federal taxes from each payment. So on $400/week, you'd get $360 but avoid a surprise tax bill. Without withholding, you get the full amount but will owe taxes on every penny when you file - which can easily be $1000+ depending on how long you're on benefits. I'd definitely recommend choosing withholding, especially since you can always adjust it later if needed through your online account.
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