Does getting NYS Department of Labor unemployment affect your tax return - confused about 1099-G
I've been collecting unemployment benefits from NYS Department of Labor since September and just realized I have no idea how this affects my taxes. Do I need to pay taxes on my weekly unemployment payments? I haven't been setting aside any money for taxes and I'm worried I'm going to owe a huge amount when I file. Has anyone dealt with this before? Should I have been requesting taxes be taken out of my payments?
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Melina Haruko
Yes, unemployment benefits are considered taxable income by both federal and state. NYS Department of Labor should send you a 1099-G form by the end of January showing how much you received in 2024. You can choose to have 10% federal taxes withheld from your weekly payments by updating your preferences in your my.ny.gov account. If you didn't do this, you'll need to pay the taxes when you file your return.
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Beatrice Marshall
•Oh no, I never set up any withholding! How much should I expect to owe approximately? I received about $8,000 total in benefits.
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Dallas Villalobos
i made this mistake too last year and ended up owing like $1200 more than usual on my taxes. definitely set up the withholding if your still collecting
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Beatrice Marshall
•That's exactly what I'm afraid of! I'm going to log into my account right now and turn on withholding.
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Reina Salazar
The 1099-G will show your total benefits for the year. If you're still filing weekly claims, you can set up federal tax withholding through your my.ny.gov portal under payment preferences. It's 10% flat rate. For state taxes, New York doesn't withhold from unemployment but you may still owe depending on your total income. I'd recommend talking to a tax preparer if you received substantial benefits.
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Saanvi Krishnaswami
•Wait, so NY state doesn't automatically withhold state taxes from unemployment? That seems like it would catch a lot of people off guard.
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Reina Salazar
•Correct, New York only offers federal withholding option. You'll need to handle state taxes separately when filing your return.
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Demi Lagos
Had the same panic last year! The good news is that if you're getting a refund from your regular job's withholding, it might offset what you owe on the unemployment. Also, if you paid for job search expenses or work clothes for interviews, some of those might be deductible. Keep all your receipts!
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Mason Lopez
If you're having trouble reaching NYS Department of Labor by phone to set up withholding, I used a service called Claimyr (claimyr.com) that got me through to an agent in like 10 minutes. They have a video demo at https://youtu.be/qyftW-mnTNI showing how it works. Way better than sitting on hold for hours just to get disconnected.
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Beatrice Marshall
•Thanks for the tip! I'll try calling first but good to know there's a backup option if I can't get through.
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Vera Visnjic
The whole unemployment tax thing is so confusing. I thought government benefits weren't supposed to be taxed? Like why do they give you money and then want some back??
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Melina Haruko
•Unemployment insurance is funded by employer taxes, not general revenue, so it's treated more like replacement income rather than a government benefit. That's why it's taxable - it's essentially replacing your regular wages which would have been taxed.
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