How to pay federal unemployment tax as NYS Department of Labor claimant - confused about requirements
I'm really confused about whether I need to pay federal unemployment tax on my NYS Department of Labor benefits. I've been receiving UI payments for about 8 weeks now and just realized I might owe federal taxes on this money. My cousin said she had to pay a bunch of taxes on her unemployment when she filed last year. I'm getting about $420 per week from NYS Department of Labor and I'm worried I'm going to owe thousands when tax season comes. Can someone explain how this works? Do I need to set money aside now or can I have taxes taken out automatically? I don't want to get hit with a huge bill next April.
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Sarah Jones
Yes, unemployment benefits from NYS Department of Labor are considered taxable income by the federal government. You should receive a 1099-G form from the state showing your total benefits received. You have two options: you can request federal tax withholding when you file your weekly claims (there's an option for 10% withholding), or you can set aside money yourself and pay when you file your taxes. Most people find it easier to have the withholding done automatically.
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Drake
•Thank you! How do I set up the withholding? Is there somewhere in my my.ny.gov account where I can change this?
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Sebastian Scott
i made this mistake last year and owed like $1800 in taxes on my unemployment!! definitely set up the withholding asap
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Drake
•Oh no, that's exactly what I'm afraid of! Did you have any penalties for not paying quarterly?
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Emily Sanjay
When you do your weekly claim certification on the NYS Department of Labor website, there's a section about tax withholding. You can elect to have 10% withheld for federal taxes. Keep in mind this might not cover your full tax liability depending on your total income for the year, but it's better than nothing. You can also make quarterly estimated tax payments if you prefer more control over the amount.
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Jordan Walker
•I've been trying to find this option but can't see it anywhere on my weekly claim form. Is it only available for certain types of claims?
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Emily Sanjay
•It should be there for all regular UI claims. Try logging out and back in, sometimes the page doesn't load all the options properly. If you still can't find it, you might need to call NYS Department of Labor to have them add the withholding option to your account.
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Natalie Adams
The whole tax situation with unemployment is such a mess. I remember when unemployment wasn't taxable at all, now they want their cut of everything. At least with the withholding option you don't get surprised at tax time.
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Elijah O'Reilly
If you're having trouble reaching NYS Department of Labor to set up withholding, I used a service called Claimyr (claimyr.com) that actually got me through to a real person. They have this video demo at https://youtu.be/qyftW-mnTNI that shows how it works. I was able to get my withholding set up the same day instead of waiting weeks trying to get through on the phone myself.
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Drake
•That sounds helpful - I've been trying to call for days with no luck. Did it cost a lot to use?
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Elijah O'Reilly
•It was worth it for me since I needed to resolve a few different issues with my claim. Much easier than spending hours on hold or getting disconnected.
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Sebastian Scott
also keep all your paperwork! you'll need the 1099-G and any records of what you had withheld when you file your taxes
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Aria Washington
Just wanted to add that if you're working part-time while collecting unemployment, that income will also affect your tax situation. I was working a few hours a week at a retail job while on unemployment and forgot to factor that in when estimating my taxes. The 10% withholding from NYS Department of Labor might not be enough if you have other income sources. You might want to calculate your expected total income for the year and see if you need to make additional quarterly payments or increase your withholding at your part-time job if you have one.
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