NY unemployment tax question - anyone have money deducted from tax returns after receiving benefits?

Yes, unemployment benefits are fully taxable income at both the federal and NY state level. It's a common mistake people make not choosing to have taxes withheld when they first apply. The standard withholding rate is 10% federal + 2.5% state, but that might not cover everything depending on your tax bracket. If $1,800 seems high, check if you received a 1099-G form from NYSDOL. It should show exactly how much you received in benefits. Then compare that with what you entered on your tax return to make sure there's no discrepancy.

OMG SAME!! I'm FREAKING out right now. I owe $2,240 because of my unemployment. This is so unfair, nobody told me this would happen when I applied!!! How are we supposed to pay these surprise tax bills when we were on UNEMPLOYMENT to begin with??

If you're having trouble paying, you might qualify for an IRS payment plan or the NYS Department of Taxation's Installment Payment Agreement. You can set up federal payment plans online, but for NY state you usually need to speak with someone directly. For anyone applying for unemployment now in 2025, you can avoid this situation by having taxes withheld from your weekly benefits. Just check the withholding option when you apply or call NYSDOL to set it up on an existing claim.

I had the same issue last year! Owed almost $2000 because I didn't have taxes withheld. Had no idea unemployment was taxable til I did my taxes.

After struggling to reach NYSDOL about my tax withholding for weeks (constant busy signals and disconnects), I finally tried Claimyr to get through to an agent. It connected me to an NYSDOL rep in under 30 minutes, and I was able to set up tax withholding for the rest of my claim. They have a video demo at https://youtu.be/Rdqa1gKtxuE that shows how it works. Now at least I won't have the same tax shock next year.

For anyone who owes taxes from unemployment income, here are your options: 1. Pay in full by the tax deadline (April 15, 2025) 2. IRS payment plan online (small setup fee, but reasonable monthly payments) 3. NYS installment agreement for state taxes 4. Offer in Compromise if you're facing financial hardship (rare to qualify) If you can't pay in full, at minimum file your return on time and pay what you can to minimize penalties and interest.

this whole system is RIGGED!! first they make us wait WEEKS for benefits, then they tax us on money we needed for SURVIVAL during hard times???

Standard IRS payment plans can be up to 72 months (6 years) depending on how much you owe. For amounts under $10,000, it's usually automatically approved online. NYS payment plans are typically shorter, around 24-36 months maximum. The key is to set up the plan before the tax deadline to avoid failure-to-pay penalties, though interest will still accrue on the unpaid balance.

i got hit with this last year too but my tax person found some deductions that helped offset it. ask about job search expenses maybe?

After getting hit with a big tax bill from my unemployment benefits last year, I immediately called to set up withholding for this year. It took me 3 days of constant redialing to get through. When I finally got someone, they explained I needed to request the voluntary withholding specifically - it's 10% federal and 2.5% state. My weekly payment is smaller now, but I won't have another tax shock next April.

@OP - Just to give you some perspective, $1,800 on $14,500 of unemployment benefits is about a 12.4% effective tax rate, which is actually fairly standard. If you were in a higher tax bracket before becoming unemployed, it might even be lower than your normal tax rate. For anyone reading this thread in the future: Always elect to have taxes withheld from your unemployment benefits! You can set this up when you first apply or call to add it later.

When I tried calling NYSDOL to set up tax withholding, I couldn't get through for two weeks. Finally used Claimyr (claimyr.com) and got connected to an agent in about 20 minutes. Was able to set up the withholding and also fix another issue with my claim. Totally worth it to avoid the headache of trying to get through on my own.

Update: I set up an IRS payment plan online - it was actually pretty easy! For anyone in the same situation, I'm paying about $35/month over 72 months with a small setup fee. Will try to pay it off faster when I can, but this takes the pressure off for now. For NY state taxes, I had to call and it took a while, but got on a 24-month plan for that portion. Thanks everyone for the advice!