How much does NYS Department of Labor unemployment take out for taxes - confused about withholding

Unemployment benefits are taxable income, but NYS Department of Labor doesn't automatically withhold taxes unless you specifically request it. When you filed your claim, you had the option to have 10% withheld for federal taxes. If you didn't select that option, they're paying you the full benefit amount and you'll need to handle taxes yourself. You can change your withholding election by logging into your my.ny.gov account and updating your claim information.

Yeah you definitely want to have taxes withheld or set money aside. I learned this the hard way last year - unemployment is taxed just like regular income. If you're getting the full amount now, you should probably save around 15-20% for federal and state taxes. New York state taxes unemployment benefits too, not just federal.

I had the same question when I started collecting. You can change your tax withholding at any time through the my.ny.gov portal. Just log in, go to your unemployment claim, and look for tax withholding options. It's better to have them take it out now than get surprised with a big tax bill later.

If you're having trouble reaching NYS Department of Labor to change your tax settings or have other questions about your claim, I used a service called Claimyr that helped me get through to an actual agent. They have a website at claimyr.com and there's a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Way better than sitting on hold for hours trying to call the regular number.

The whole tax thing with unemployment is such a mess. They should just automatically withhold like 15% and let people opt out if they want, not the other way around. Too many people get screwed at tax time because they didn't realize unemployment is taxable income.

Just want to add that if you do decide to have taxes withheld, the 10% federal withholding might not be enough depending on your total income for the year. If you had a higher-paying job before unemployment or have other income sources, you might want to consider making quarterly estimated tax payments to avoid underpayment penalties. You can calculate what you might owe using the IRS withholding calculator on their website. Also worth noting that if you're collecting unemployment for most of the year, you'll probably want to file your taxes as early as possible since unemployment 1099-G forms sometimes have errors that need to be corrected.