Do I want taxes withheld from unemployment benefits in NY - confused about tax implications

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.

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

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.

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.

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!

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.

I went through this exact same decision last year and chose not to withhold - big mistake! I ended up owing about $800 in federal taxes plus another $300 to NY state. The 10% withholding definitely doesn't cover everything you'll owe, but it helps A LOT. Even with withholding I probably would have only owed like $200 total instead of over $1000. Also keep in mind that unemployment benefits count as income for the entire year, so if you find a job later, you'll still owe taxes on all the unemployment you received. Trust me, choose the withholding option - your future self will thank you!

I was in the same boat when I first applied - the tax withholding question really threw me off! Based on my experience and what others have shared here, definitely go with the withholding option. I chose not to withhold initially thinking I'd just save the money myself, but that was naive. When tax season came around, I owed about $900 between federal and state taxes on my unemployment benefits. The 10% federal withholding won't cover your entire tax liability, but it makes a huge difference. Even if you still owe something at tax time, it'll be manageable rather than shocking. Plus, as others mentioned, you can always adjust the withholding later through your online account if your situation changes. Better safe than sorry with taxes!

As someone who just went through this process a few months ago, I can't stress enough how important it is to choose the withholding option! I initially hesitated because I thought I could manage the money better myself, but unemployment benefits are taxed just like regular wages. The 10% federal withholding they offer is automatic and gets sent directly to the IRS on your behalf. While it won't cover 100% of what you'll owe (you'll likely still owe NY state taxes and potentially a bit more federal), it prevents that heart-stopping moment when you realize you owe $1000+ at tax time. I ended up owing about $150 total with withholding versus what would have been around $800 without it. Also, remember that if you're married or have other income sources, your tax situation gets more complex. The peace of mind alone is worth the slightly smaller weekly payments!