NY unemployment tax confusion - received letter about $10,200 taxable amount from 2020 return
I just got a weird letter from NY state tax department about my 2020 tax return where I received unemployment benefits. The letter is asking about making the $10,200 in unemployment benefits from 2020 taxable? I thought the federal government made the first $10,200 of unemployment NON-taxable for 2020 because of the pandemic. Is NY state doing something different? Anyone else get this letter recently? I'm confused because this is from a tax return filed years ago. Do I need to respond or pay additional taxes now?
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Freya Pedersen
Yes, this is actually a known issue. The federal government did make the first $10,200 of unemployment benefits non-taxable for 2020 federal returns, but New York State did NOT conform to this exemption. NY State still considers all unemployment benefits fully taxable, regardless of the federal exemption. If you only excluded it from your federal return but not your state return, you should be fine. If you also excluded it from your NY state return, you may owe additional state taxes.
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Ravi Gupta
•Oh no! I definitely excluded it from both federal AND state returns. I had no idea NY was treating it differently. The letter says I might owe around $650 plus interest. That's going to be a big hit right now.
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Omar Hassan
got the same letter last week!! freaked me out cuz i thought i did everything right back then. why are they just sending these now in 2025 for something from 2020??
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Freya Pedersen
•The NYS Tax Department has been doing a lot of backlog processing since 2024. They're going through returns from the pandemic years and finding these mismatches. Unfortunately, there's no statute of limitations that would prevent them from collecting now.
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Chloe Anderson
THIS IS RIDICULOUS! The state knows darn well they didnt make this clear back in 2020. I got hit with this LAST MONTH too. $830 plus interest!!!! They're just trying to squeeze more money out of people who were already struggling during the pandemic. NYSDOL and tax dept were a MESS back then with conflicting info everywhere. How were we supposed to know?? 😡😡😡
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Omar Hassan
•for real! feels like a cash grab to me. wish they would just drop it, been 5 years already
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Diego Vargas
•While I understand the frustration, technically this was in the tax instructions for 2020 NY returns. It was in the NYS IT-201 instruction booklet on page 13, specifically stating that NY did not conform to the federal unemployment exclusion. But I agree the communication could have been much clearer given the unusual circumstances.
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CosmicCruiser
wait do i need to worry about this if i never got a letter? i definitely claimed that exemption on both returns back then
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Anastasia Fedorov
•If you haven't received a letter yet, you might still be in their processing queue. I'd recommend checking your NY state tax account online to see if there are any notices there that might not have reached you by mail.
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Ravi Gupta
Has anyone successfully gotten this reduced or waived? I can't afford to pay this right now on top of my current unemployment situation.
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Anastasia Fedorov
•You can request an installment payment plan from NY Tax Department. Call the number on the notice to set it up. They'll usually work with you if you're currently unemployed. Also, you might be able to request a penalty abatement due to reasonable cause (confusion during pandemic), though you'll likely still owe the tax and interest.
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Sean Doyle
•Good luck getting through to anyone at NY tax dept! I've been trying for days. Always on hold for 2 hours then disconnected. Tried six times now. Has anyone actually managed to speak to a human there?
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Diego Vargas
For those dealing with this issue, here's what you need to know: 1. The $10,200 unemployment exclusion was ONLY for federal taxes (part of the American Rescue Plan Act) 2. New York State explicitly did not adopt this exclusion 3. If you received this letter, you'll need to file an amended NY state return (Form IT-201-X) 4. You can request a payment plan if needed 5. You may request penalty abatement, but interest typically cannot be waived The notice should include specific instructions on how to respond. Don't ignore it as penalties will continue to accrue.
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Ravi Gupta
•Thank you for laying this out clearly. I'll look into filing the amended return. Do you know if I need to use the original 2020 tax forms or current ones?
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Diego Vargas
•You'll need to use the 2020 forms. You can find them in the "Prior Year Forms" section on the NY Tax Department website. Just search for "IT-201-X 2020" and you should find what you need.
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CosmicCruiser
my sister went thru this last year and says we all need to check if we filed with turbotax cuz apparently they messed up a lot of ny returns that year and applied the federal exemption to state returns automatically
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Omar Hassan
•omg i did use turbotax!! that would explain it
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Freya Pedersen
If anyone is having trouble getting through to the NY Tax Department about this issue, I recently discovered a service called Claimyr that helps you get through to agents quickly. I was trying for days with no luck, but with Claimyr I got through in about 15 minutes. Their website is claimyr.com and they have a video showing how it works: https://youtu.be/Rdqa1gKtxuE They basically call and wait on hold for you, then call you when an agent is on the line. Really helpful when dealing with these time-sensitive tax issues.
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Ravi Gupta
•Thanks for the tip! I've been trying to get through all morning with no luck. I'll check this out because I need to get this sorted before more interest accrues.
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Chloe Anderson
•Does this actually work? Seems too good to be true after spending HOURS trying to reach someone.
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Freya Pedersen
•Yes, it really works. I was skeptical too but was desperate after multiple failed attempts. You do have to provide your phone number so they can call you when they get through, but it saved me hours of frustration.
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Ravi Gupta
Update: I finally got through to the tax department (used that Claimyr service someone mentioned above - worked great). They confirmed I do owe the tax but said I can set up a payment plan. The agent also said I could request penalty abatement by writing a letter explaining I was confused by the federal exclusion. Still not happy about this but at least I know what I'm dealing with now. Thanks everyone for your help!
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Diego Vargas
•Glad you got it resolved! For anyone else in this situation, make sure to get the payment plan in writing and keep records of all your communications with the tax department.
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Omar Hassan
•good to know! gonna try to call them tomorrow
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