Is unemployment considered wages for tax purposes in NY?
I'm really confused about whether my NYS Department of Labor unemployment benefits count as wages. I've been getting UI payments since October and now I'm trying to figure out my taxes. My accountant said something about it being taxable income but not wages? I got a 1099-G form from NYS Department of Labor but I'm not sure how to handle this. Does anyone know if unemployment is considered wages or not? I need to know for some financial aid forms I'm filling out too.
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Noah Irving
Unemployment benefits from NYS Department of Labor are taxable income but they're NOT considered wages. You'll report them on your tax return using the 1099-G form you received, but they don't count as earned income or wages for things like Social Security credits or certain tax credits like the Earned Income Tax Credit.
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Katherine Ziminski
•Thanks! So for my FAFSA form when it asks about wages, I shouldn't include the unemployment amount?
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Vanessa Chang
yeah unemployment is definitely taxable but not wages, learned this the hard way last year when i didnt set aside money for taxes and owed like $800
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Madison King
•You can actually have taxes withheld from your NYS Department of Labor payments if you want. There's an option when you file your weekly claims to have federal taxes taken out automatically.
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Julian Paolo
I had the same question when I was on unemployment for 6 months. For most purposes like loan applications and financial aid, unemployment benefits are considered unearned income, not wages. But definitely check with whoever is asking because some forms treat it differently.
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Katherine Ziminski
•That makes sense. I guess I need to read the specific instructions for each form I'm filling out.
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Ella Knight
This whole system is so confusing! Why can't they just make it simple and call it what it is? I spent hours trying to figure this out when I was dealing with my claim last year. The NYS Department of Labor website should explain this better.
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Madison King
If you're having trouble reaching NYS Department of Labor to clarify anything about your benefits or tax forms, I found this service called Claimyr that helps you get through to an actual agent. Check out claimyr.com - they have a demo video at https://youtu.be/qyftW-mnTNI that shows how it works. Saved me hours of trying to call on my own.
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Katherine Ziminski
•That's interesting, I might need to try that if I have more questions about my 1099-G form.
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William Schwarz
Just to add - unemployment benefits also don't count toward your Social Security earnings record, which is another way they differ from regular wages. Important to know if you're close to retirement and tracking your earnings history.
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