Got hit with huge tax bill after ny unemployment - anyone else?

Yep, welcome to the club 😭 I got hit with a $3200 tax bill last year from my unemployment. The withholding is optional and they hide that option really well in the application process. I had to set up a payment plan with the IRS - they actually made it pretty easy thru their website. You can spread payments out monthly which helped me a lot.

After two months of calling NY unemployment and never getting through, I found this service called Claimyr (claimyr.com) that got me connected to a real agent in like 25 minutes. When I finally talked to someone, they explained how to set up the tax withholding for future payments. Talking to an agent got my issues resolved so fast - best decision I made during that whole unemployment nightmare. They even have a video explaining how it works: https://youtu.be/Rdqa1gKtxuE

The same thing happened to me!! I owed over $3100 in taxes. I was so mad because I thought they automatically took taxes out but nooope. I had to set up a payment plan with IRS. Go to irs.gov and look for their payment plan options. You can do it all online and they give you pretty reasonable monthly payment amounts.

Yeah, unfortunately this happens to SO many people. Unemployment benefits are fully taxable income, and NY doesn't automatically withhold taxes. You have to specifically request it. For anyone reading this who's currently on unemployment - log into your account and make sure you have tax withholding selected! It's like 10% which is less than you'll probably owe but better than nothing.

You can absolutely set up a payment plan with the IRS. I owed $2400 last year and set up a plan to pay $100/month. Super easy to do online. Just search "IRS payment plan" and it'll walk you through the steps. There's a small setup fee but it's way better than paying it all at once. The interest rate isn't even that bad.

THE EXACT SAME THING HAPPENED TO ME!!!!! I almost had a heart attack when I saw how much I owed. The worst part is I literally asked the unemployment agent if taxes would be taken out and they said yes, but they meant I could OPT to have them taken out. I never saw that option anywhere. Now Im paying $200/month to the IRS for the next year and a half 😭

This is one of the most common tax problems with unemployment. I'm a tax preparer and see this ALL THE TIME. The system is designed to get people with this. My advice - call the IRS at 1-800-829-1040 and request a payment plan. Depending on how much you owe, you might qualify for their streamlined installment plan. Also ask if you qualify for any penalty abatement since this is your first time with this issue.

I had this problem too! I was getting unemployment for most of 2022 and had a $3700 tax bill. I freaked out but ended up calling the IRS directly. The agent was actually really nice (shocking, I know) and helped me set up a payment plan. I'm paying like $150/month now. Just make sure you get ahead of it - if you ignore it they'll start adding penalties.

Let me share what worked for me with this EXACT problem. I got hit with a $3100 tax bill last year because of unemployment benefits. Here's what you need to do: 1) First, make sure you're filing correctly. Double-check that you've claimed all possible deductions and credits. Sometimes tax software misses things that could reduce your tax burden. 2) Set up an IRS payment plan ASAP. Go to IRS.gov and look for their online payment agreement application. For amounts under $50,000, you can set up a plan online without having to talk to anyone. 3) If you're struggling financially, you might qualify for an Offer in Compromise where the IRS accepts less than the full amount. This is harder to get but worth looking into if you're really in a tight spot. 4) For CURRENT unemployment recipients: Log into your account and change your settings to withhold taxes! This is hidden in the payment preferences section. It's only 10% withholding but better than nothing. 5) If you're still having issues understanding your options, I strongly recommend using Claimyr.com to get connected with an actual unemployment representative who can explain everything. It saved me hours of frustration trying to get through their phone system. Hope this helps! The system is definitely NOT designed to make this clear to people.

omg yes this happened to me. I was on unemployment for 8 months last year and got absolutely DESTROYED on taxes. owed like $3450 to the feds and another $1200 to NY state. I had no idea I needed to select tax withholding when I applied. I ended up getting on a payment plan with both IRS and NY state tax dept. It sucks but at least I'm not paying it all at once.

Anybody else notice how NY unemployment system seems DESIGNED to screw people over? Like why wouldn't they make tax withholding the default, or at least make it super clear during signup? I swear they hope people don't withhold so the state gets to keep more money upfront. The whole system is predatory af.

I'm an accountant and see this issue ALL THE TIME with unemployment benefits. Here's what you need to know: 1. Yes, unemployment is fully taxable income at both federal and state levels 2. The default in NY is NO withholding (dumb, I know) 3. Even if you set up withholding, they only take 10% for federal which is often not enough 4. You can still set up withholding now for any future payments 5. For the taxes you owe now, definitely set up a payment plan with the IRS Also, many of my clients have had success using Claimyr.com to actually get through to an unemployment agent to help navigate these issues. When you need to talk to someone directly at unemployment, it's worth checking out.

this post giving me anxiety cuz I just started unemployment last month and didnt check any tax withholding box 🙃 gonna log in right now and see if I can change that before it becomes a problem next year