How is federal unemployment tax calculated on my NYS Department of Labor claim?
I just started receiving unemployment benefits from NYS Department of Labor and I'm confused about the tax situation. My weekly benefit amount is $504 but I want to understand how the federal taxes work on this. Do they automatically withhold federal taxes or do I need to handle this myself? I've heard conflicting information about whether unemployment is taxable income and how much I should expect to owe. Can someone explain how the federal unemployment tax calculation works for NYS benefits?
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Yuki Ito
Yes, unemployment benefits from NYS Department of Labor are considered taxable income by the federal government. You have the option to have 10% federal tax withheld from your weekly payments, or you can choose to receive the full amount and pay quarterly estimated taxes or when you file your return. To set up withholding, log into your my.ny.gov account and look for the tax withholding option in your payment preferences.
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Ethan Taylor
•Thank you! So if I'm getting $504 per week, they would withhold about $50 if I choose the 10% option?
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Carmen Lopez
i made this mistake last year and owed like $2800 when i filed my taxes because i didnt have anything withheld... definitely recommend setting up the withholding through the nys department of labor system
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AstroAdventurer
•That's exactly why I always tell people to withhold. The 10% federal withholding usually covers most of what you'll owe, though you might still owe a little extra depending on your tax bracket. It's much easier than getting hit with a big bill at tax time.
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Andre Dupont
Wait I'm confused - is this different from the FUTA tax that employers pay? I thought that was the federal unemployment tax
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Yuki Ito
•No, FUTA (Federal Unemployment Tax Act) is what employers pay to fund the unemployment system. What we're talking about here is regular federal income tax on the unemployment benefits you receive. Two completely different things.
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Zoe Papanikolaou
If you're having trouble getting through to NYS Department of Labor to set up the tax withholding, I used this service called Claimyr (claimyr.com) that helped me get connected to an agent quickly. 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 reach someone.
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Ethan Taylor
•How much does something like that cost? I just need to change my withholding settings.
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Zoe Papanikolaou
•I think it's worth checking out their site for pricing info. For me it was worth it just to avoid the endless phone calls and busy signals when trying to reach NYS Department of Labor directly.
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Jamal Wilson
Just remember you'll get a 1099-G form from NYS Department of Labor in January showing your total benefits received for the year. You'll need this when filing your taxes.
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