Does unemployment take out taxes automatically in NYS Department of Labor benefits?
I just started collecting unemployment benefits from NYS Department of Labor and I'm confused about taxes. When I file my weekly claims, I don't see any option to have taxes withheld. Are taxes automatically taken out of my payments or do I need to do something? I really don't want to get hit with a huge tax bill next year when I file my return.
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Chloe Wilson
No, NYS Department of Labor doesn't automatically withhold taxes from your unemployment benefits. You have to request it when you set up your claim or change it later. Log into your my.ny.gov account and look for the tax withholding option in your payment preferences. You can choose to have 10% federal taxes withheld.
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Omar Fawzi
•Thanks! I'll check my account right now. Is 10% usually enough or should I save more on my own?
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Diego Mendoza
Yeah unemployment benefits are taxable income so you definitely want to plan for that. I learned this the hard way my first time collecting UI benefits. You can either have the 10% withheld or just save about 15-20% of each payment yourself for taxes. The withholding option is easier if you're not good at saving money.
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Anastasia Romanov
•This is so important! I forgot about taxes my first time and owed like $1,200 when I filed. Now I always have them withhold the 10%.
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StellarSurfer
wait so if i been getting unemployment for 8 weeks and didnt withhold anything am i screwed?? i had no idea about this
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Chloe Wilson
•You're not screwed! You can change your withholding preference anytime through your NYS Department of Labor account. Just start withholding now for future payments and set aside money from what you've already received.
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Sean Kelly
If you're having trouble reaching NYS Department of Labor to change your tax settings or have other questions about your claim, I had success using Claimyr (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. Really helped when I couldn't get through the regular phone lines to update my payment preferences.
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Zara Malik
•How much does that cost though? I'm on unemployment so money is tight right now.
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Sean Kelly
•It's worth checking out their site for current info. For me it was worth it to actually talk to someone instead of being on hold for hours or getting disconnected.
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Luca Greco
Just remember you'll get a 1099-G form in January showing all the unemployment income you received during the year. Make sure you include that when you file your taxes!
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Nia Harris
Great advice everyone! Just wanted to add that you can also estimate your tax liability using the IRS withholding calculator on their website. Since unemployment benefits are taxed as ordinary income, if you were in the 12% or 22% tax bracket at your previous job, the 10% withholding might not be enough. I usually recommend setting aside at least 15-20% to be safe, especially if you're also receiving benefits for state taxes in some situations.
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