Do taxes come out of unemployment benefits from NYS Department of Labor?
I just started receiving unemployment benefits and I'm confused about the tax situation. When I look at my payment stub on my.ny.gov, it shows the full benefit amount but I'm wondering if taxes are automatically taken out or if I need to handle that myself? I don't want to get hit with a huge tax bill next year. Can someone explain how this works with NYS Department of Labor payments?
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Mateo Hernandez
You have the option to have federal taxes withheld from your unemployment benefits. When you first filed your claim, there should have been a question about tax withholding. If you chose to have taxes withheld, 10% is automatically deducted for federal taxes. You can also change this election by logging into your my.ny.gov account and updating your payment preferences.
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Nia Jackson
•I think I skipped that question when I was filing because I was so focused on getting the claim submitted. Can I go back and add tax withholding now?
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CosmicCruiser
yes you can change it anytime through your online account. go to payment preferences and select federal tax withholding. i learned this the hard way last year when i owed like $800 at tax time
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Aisha Khan
•Ugh same thing happened to me! I had no idea unemployment was taxable income until I got my 1099-G form.
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Ethan Taylor
Just a heads up - unemployment benefits are considered taxable income at both federal and state levels in New York. If you don't have taxes withheld, you'll need to pay quarterly estimated taxes or be prepared for a bill when you file your return. The NYS Department of Labor will send you a 1099-G form in January showing the total amount you received during the tax year.
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Nia Jackson
•Thank you! This is really helpful. I'm definitely going to set up the withholding today.
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Yuki Ito
I've been trying to update my tax withholding for weeks but the my.ny.gov website keeps timing out when I try to access payment preferences. Has anyone else had this issue? I really don't want to deal with calling NYS Department of Labor because the wait times are insane.
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CosmicCruiser
•I had luck using Claimyr to get through to an actual agent who helped me update my withholding over the phone. Check out claimyr.com - they have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Way easier than sitting on hold for hours.
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Yuki Ito
•Thanks! I'll check that out. At this point I'm willing to try anything to avoid the phone nightmare.
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Carmen Lopez
Wait, so if I'm getting $400 a week and I elect for tax withholding, they'll take out $40 each week? That seems like a lot when you're already struggling financially.
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Mateo Hernandez
•It's 10% for federal taxes only. You'll still owe state taxes when you file your return, but at least the federal portion is covered. It's better to have it taken out gradually than to owe hundreds or thousands all at once.
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