Do you pay FICA taxes on NYS Department of Labor unemployment benefits?
I've been receiving unemployment benefits from NYS Department of Labor for about 8 weeks now and just realized I might need to think about taxes. My coworker mentioned something about FICA taxes and now I'm confused. Do I have to pay Social Security and Medicare taxes on my weekly unemployment payments? I've been having taxes withheld but I'm not sure if that covers everything. Has anyone dealt with this before?
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Liam Fitzgerald
No, you don't pay FICA taxes on unemployment benefits. FICA only applies to wages from employment. However, unemployment benefits ARE subject to federal and state income taxes. When you file your weekly claim with NYS Department of Labor, you can choose to have 10% withheld for federal taxes and additional amount for state taxes.
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Mei Lin
•Oh thank goodness! I was worried I'd owe a huge tax bill. So the withholding I selected should cover the income tax part then?
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GalacticGuru
yeah ur not paying into social security or medicare on unemployment money but you still gotta pay regular income tax on it
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Amara Nnamani
This is correct - unemployment compensation is not subject to FICA taxes (Social Security and Medicare). The IRS treats unemployment benefits as taxable income for federal purposes, but not as earnings subject to payroll taxes. NYS Department of Labor will send you a 1099-G form showing the total benefits paid for the tax year.
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Giovanni Mancini
•Wait, so I don't get credit toward my Social Security earnings for the time I was on unemployment? That seems unfair.
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Amara Nnamani
•Correct, unemployment benefits don't count toward your Social Security earnings record since you're not paying into the system during that time. Only wages from actual employment count toward your 40 quarters needed for Social Security eligibility.
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Fatima Al-Suwaidi
I had trouble getting through to NYS Department of Labor to change my tax withholding settings last year. If you're having issues reaching them by phone, I found this service called Claimyr that helped me get connected to an actual agent. Check out claimyr.com - they have a demo video at https://youtu.be/qyftW-mnTNI that shows how it works. Made dealing with the phone system so much easier.
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Dylan Cooper
•Interesting, never heard of that before. The NYS Department of Labor phone lines are definitely a nightmare to get through to.
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Dylan Cooper
Just to add - if you didn't have taxes withheld and you're getting substantial unemployment benefits, you might want to make quarterly estimated tax payments to avoid owing a big chunk at tax time. I learned this the hard way when I was on unemployment for 6 months.
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Malik Thomas
•That's really good advice about quarterly payments. How do you calculate how much to send in? I'm worried about underpaying and getting hit with penalties.
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