Do taxes get taken out of unemployment benefits in New York?
I just started receiving unemployment benefits from NYS Department of Labor and I'm confused about the tax situation. When I look at my payment details, it shows the full amount but I'm not sure if taxes are being withheld automatically or if I need to handle this myself. I remember hearing different things about whether unemployment is taxable income. Can someone explain how this works? Do I need to request tax withholding or will I owe money at tax time?
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Liam McGuire
Yes, unemployment benefits are considered taxable income by both federal and New York state. NYS Department of Labor doesn't automatically withhold taxes from your weekly payments - you have to specifically request it. You can set up tax withholding through your my.ny.gov account or by calling the Tel-Service line. Federal withholding is 10% and NY state is about 3.5%. If you don't withhold, you'll likely owe taxes when you file your return.
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Mei Zhang
•Thanks! How do I set this up through my.ny.gov? I don't want to get hit with a big tax bill later.
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Amara Eze
i didnt know this either when i first got benefits last year and ended up owing like $800 at tax time :( definitely set up the withholding
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Giovanni Ricci
To set up withholding, log into your my.ny.gov account and go to the 'Payment and Tax Information' section. There should be an option to elect federal and/or state tax withholding. You can also change this at any time if your situation changes. Just remember that even with withholding, you might still owe some taxes depending on your total income for the year.
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NeonNomad
•Is there a way to withhold more than the standard percentages? I had other income this year and want to be safe.
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Fatima Al-Hashemi
I've been trying to reach someone at NYS Department of Labor to clarify my tax withholding situation but their phone lines are always busy. I've been on hold for over an hour multiple times this week. Has anyone found a better way to get through to them? I need to make changes to my withholding before my next payment.
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Liam McGuire
•You might want to try Claimyr.com - they help people get through to NYS Department of Labor agents quickly. I used them when I couldn't reach anyone about my claim issues. They have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Way better than sitting on hold for hours.
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Dylan Mitchell
Wait I'm confused - I thought all government benefits were tax-free? This is news to me and I've been collecting for 6 weeks already without any withholding set up.
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Liam McGuire
•No, unemployment insurance benefits are definitely taxable income. You're probably thinking of certain welfare programs or disability benefits which can be tax-free. You should set up withholding ASAP and maybe consider making an estimated tax payment for what you've already received.
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Sofia Martinez
Just wanted to add that you'll get a 1099-G form from NYS Department of Labor at the end of the year showing your total benefits received. Make sure to keep track of this for tax filing. Also if you had any federal taxes withheld, it will show on the form too.
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PixelWarrior
This is really helpful info! I'm in a similar situation - just started collecting last month and had no idea about the tax implications. Quick question: if I set up withholding now, does it only apply to future payments or can they somehow withhold extra to cover what I've already received without withholding? I'm worried about owing a chunk at tax time like @Amara mentioned.
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Jamal Carter
•Unfortunately, the withholding only applies to future payments - they can't retroactively withhold from what you've already received. But don't panic! You have a few options: you could increase your withholding percentage above the standard rates for future payments to help cover the gap, or make quarterly estimated tax payments to the IRS and NY state for the amount you've already received. I'd recommend calculating roughly what you might owe (10% federal + 3.5% NY state on what you've received so far) and either set aside that money or make an estimated payment. Better to be proactive than get hit with a big bill plus potential penalties later.
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Paolo Longo
Just a heads up for everyone dealing with the phone wait times - I found that calling the Tel-Service line right when they open at 8am tends to have shorter hold times. Also, if you're tech-savvy, the my.ny.gov portal is usually your best bet for making changes to tax withholding since it's available 24/7. I set mine up online in about 5 minutes once I figured out where to navigate. One more tip: keep screenshots of your withholding elections in case there are any discrepancies later - I learned this the hard way when there was a glitch and my withholding didn't take effect for two weeks.
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Alexis Robinson
•That's great advice about calling right at 8am! I've been struggling to get through too. One thing I'd add - if you do use the online portal, make sure to check back in a few days to confirm your withholding election actually took effect. I've heard from a few people that sometimes there can be delays or glitches in the system processing the changes. Also, does anyone know if there's a way to see exactly how much has been withheld so far once you set it up? I want to track this closely so I can adjust if needed.
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