Does unemployment count as adjusted gross income for taxes?
I'm filing my taxes and trying to figure out if the unemployment benefits I received from NYS Department of Labor last year count toward my adjusted gross income. I got about $8,400 in UI payments and want to make sure I'm reporting everything correctly. Do I need to include all of it or just part of it? Also wondering if this affects my tax bracket since I only worked part of the year before getting laid off.
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NebulaKnight
Yes, unemployment benefits are fully taxable as ordinary income and must be included in your adjusted gross income calculation. NYS Department of Labor should have sent you Form 1099-G showing the total amount you received. You'll report this on your federal return and it gets added to any other income you had during the year.
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Dylan Wright
•Thanks! I did get the 1099-G form but wasn't sure if the whole amount counted. So even though it's unemployment insurance, it's still considered regular income for tax purposes?
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Sofia Ramirez
Yeah it all counts unfortunately. I learned this the hard way when I got hit with a bigger tax bill than expected. The good news is if you had taxes withheld from your weekly UI payments, that helps reduce what you owe. You can check your 1099-G to see if any federal taxes were taken out.
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Dmitry Popov
•Wait, you can have taxes withheld from unemployment? I didn't know that was an option when I was filing my weekly claims with NYS Department of Labor.
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Sofia Ramirez
•Yeah, there's an option to have 10% federal tax withheld automatically. It's buried somewhere in the settings when you're doing your weekly claim certification.
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Ava Rodriguez
this is why the system is so messed up... you lose your job through no fault of your own and then they tax you on the benefits that are supposed to help you survive. makes no sense to me
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Miguel Ortiz
•I get the frustration but unemployment insurance has always been taxable income, it's not really a new thing. At least it's something when you're between jobs.
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Zainab Khalil
If you're having trouble reaching someone at NYS Department of Labor about your 1099-G or tax withholding questions, I had good luck using claimyr.com to get through to an actual agent. They have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Was way easier than sitting on hold for hours trying to get answers about my tax documents.
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Dylan Wright
•Thanks for the tip! I might need to call them if I can't find my 1099-G form anywhere. Did they charge you to use that service?
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Zainab Khalil
•It's not free but honestly was worth it to actually talk to someone who could pull up my account and explain the tax stuff properly. Way less stressful than the regular phone system.
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QuantumQuest
just went through this myself - make sure you also check if your state has any special rules about unemployment taxation. some states don't tax unemployment benefits even if the federal government does
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Luca Greco
•Good point! For New York specifically, the state does tax unemployment benefits just like the federal government does. So unfortunately if you received UI from NYS Department of Labor, you'll need to pay both federal and state taxes on it. Some states like California don't tax unemployment but NY isn't one of them.
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StarStrider
One thing to keep in mind about the tax bracket concern you mentioned - unemployment benefits are taxed as ordinary income, but moving into a higher tax bracket only affects the income above that threshold, not your entire income. So if your $8,400 in UI benefits plus your partial year wages pushes you into the next bracket, only the amount over the bracket limit gets taxed at the higher rate. The IRS has tax tables that can help you figure out exactly how much you'll owe. Also, if you didn't have taxes withheld from your UI payments, you might want to make estimated tax payments to avoid underpayment penalties.
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