Do you pay back unemployment taxes to NYS Department of Labor after getting benefits?
I've been getting unemployment benefits for about 8 weeks now and someone at work mentioned that you have to pay back unemployment taxes later. Is this true? I'm really confused because I thought unemployment was something we all pay into through our paychecks when we're working. Do I need to set aside money to pay the NYS Department of Labor back for my benefits? I'm already struggling financially and this is making me panic.
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Ryder Ross
No, you don't pay back unemployment taxes to NYS Department of Labor. What you received in unemployment benefits doesn't need to be repaid unless there was an overpayment due to an error. However, unemployment benefits ARE taxable income that you'll need to report on your tax return. You can choose to have taxes withheld from your weekly payments or pay them when you file your taxes.
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Kyle Wallace
•Oh thank god! So I just need to worry about regular income taxes on the benefits, not paying back the actual unemployment money?
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Gianni Serpent
your coworker probably meant income taxes on the benefits not paying back the unemployment itself. i didnt have taxes taken out and owed like $800 when i filed last year so heads up on that
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Henry Delgado
The unemployment insurance system works like any other insurance - you and your employer pay premiums (through payroll taxes) and when you need benefits, you collect them. You don't pay back car insurance when they cover an accident, same principle here. Just make sure you're reporting any work income on your weekly claims correctly to avoid overpayments.
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Olivia Kay
•THIS exactly! I was so confused about this when I first filed too. The only time you'd owe money back is if NYS Department of Labor determines you weren't eligible for some of the benefits you received.
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Joshua Hellan
Wait I'm getting more confused now. So we pay unemployment taxes when we work, then get benefits when unemployed, but then also pay income tax on those benefits? That seems like double taxation to me. Why would they tax money that came from taxes we already paid?
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Ryder Ross
•I know it seems weird but unemployment benefits are considered income replacement, so they're taxed like regular wages. The unemployment taxes you paid while working were to fund the system, not prepayment of your future benefits.
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Jibriel Kohn
If you're having trouble reaching NYS Department of Labor to get clarification on your specific situation, I found this service called Claimyr (claimyr.com) that helped me get through to an actual agent. They have a video demo at https://youtu.be/qyftW-mnTNI showing how it works. Really saved me hours of calling and getting busy signals when I had questions about my claim status.
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Kyle Wallace
•That might be helpful, I've been trying to call them for days about something else and can never get through.
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Edison Estevez
Just to add - if you do end up owing taxes on your unemployment benefits, you can usually set up a payment plan with the IRS if you can't pay it all at once. Don't stress too much about it, lots of people are in the same boat!
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