NYS Department of Labor unemployment benefits - what is the tax rate I should expect?
I've been receiving unemployment benefits for about 2 months now and just realized I should probably be thinking about taxes. What is the tax rate on unemployment benefits in New York? I'm getting $504 per week and want to make sure I'm not going to get hit with a huge tax bill next year. Should I be having taxes withheld or just save money on my own? I tried looking on the NYS Department of Labor website but couldn't find clear info about tax rates.
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Mei Wong
Unemployment benefits are taxed as regular income at your normal federal and state tax rates. There's no special 'unemployment tax rate' - it just gets added to your other income for the year. You can have 10% federal and 3% state taxes withheld automatically when you file your weekly claims, or you can save the money yourself and pay when you file.
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Jamal Anderson
•So if I'm normally in the 22% federal bracket, my unemployment gets taxed at 22% too? That's going to be a big chunk out of my benefits.
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QuantumQuasar
yeah i learned this the hard way last year, ended up owing like $2800 in taxes on my unemployment. definitely recommend having them withhold taxes when you certify your weekly claims on the NYS Department of Labor site
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Liam McGuire
You can change your withholding preference anytime by logging into your my.ny.gov account and updating your payment method settings. I started without withholding but switched to having taxes taken out after the first month when I realized how much I'd owe.
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Amara Eze
•Where exactly do you find that setting? I've been looking all over my account but can't find where to set up tax withholding.
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Liam McGuire
•When you're filing your weekly claim, there's a section about payment preferences. You'll see options for direct deposit and tax withholding right there. If you can't find it, try calling the NYS Department of Labor but good luck getting through - I had better luck using a service called Claimyr (claimyr.com) that helped me reach an actual agent. They have a video demo at https://youtu.be/qyftW-mnTNI showing how it works.
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Giovanni Greco
The NYS Department of Labor system is so confusing about this stuff! I've been getting benefits since October and still haven't figured out if I should withhold or not. My cousin says just save 25% of each payment but that seems like a lot.
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Mei Wong
•25% is actually not a bad rule of thumb. Better to save too much than not enough. You can always get a refund if you overpaid, but owing money you don't have is much worse.
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Fatima Al-Farsi
Don't forget about state taxes too! New York State taxes unemployment benefits and if you're not having state taxes withheld you could owe a decent amount there as well. The withholding options cover both federal and state.
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AstroExplorer
Just to add some specific numbers to help with planning - at $504/week for unemployment benefits, you're looking at about $26,208 annually if you were on benefits for a full year. If you're in the 22% federal bracket like you mentioned, that could mean around $5,766 in federal taxes alone, plus New York state taxes on top of that. Having the 10% federal and 3% state withheld automatically would take out about $65 per week from your $504 payment, leaving you with $439. It's definitely worth setting up the withholding rather than trying to come up with a lump sum at tax time.
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