NYS Department of Labor unemployment benefits - which federal tax provides funding?
I'm trying to understand how unemployment benefits work and was wondering which federal tax actually pays for these benefits? My employer has been laying people off and I might need to file for unemployment soon through NYS Department of Labor. I see deductions on my paystub but I'm not sure what federal tax specifically funds the unemployment system. Does anyone know how this works?
10 comments
Join the conversation
Lucas Adams
The Federal Unemployment Tax Act (FUTA) is what provides funding for unemployment benefits. Employers pay this tax, not employees. It's a federal tax that goes toward the unemployment insurance system that NYS Department of Labor administers at the state level.
0 coins
Chloe Green
•Thanks! So I don't pay into this directly from my paycheck? Only my employer does through FUTA?
0 coins
Harper Hill
Actually it's a bit more complicated than that. FUTA provides funding for the federal portion, but NYS Department of Labor also collects State Unemployment Tax (SUTA) from employers. Both taxes together fund your unemployment benefits. The federal government sets guidelines but states like New York administer their own programs.
0 coins
Caden Nguyen
•This is correct. I work in payroll and we pay both FUTA and SUTA taxes for our employees. The rates vary but it all goes toward unemployment insurance.
0 coins
Avery Flores
wait i thought we paid into unemployment from our paychecks too?? ive been seeing deductions and assumed some went to unemployment benefits
0 coins
Lucas Adams
•Those deductions you're seeing are probably for Social Security and Medicare taxes, not unemployment. Unemployment insurance is funded entirely by employer taxes, not employee contributions.
0 coins
Zoe Gonzalez
I had to deal with NYS Department of Labor when I got laid off last year and couldn't get through on the phone for weeks to ask about my claim status. Finally used a service called Claimyr that got me connected to an actual agent. They have a website at claimyr.com and there's a video demo at https://youtu.be/qyftW-mnTNI showing how it works. Really helped when I was stuck in adjudication.
0 coins
Chloe Green
•That's good to know in case I need to file. Did they help you understand the tax stuff too or just with getting through to NYS Department of Labor?
0 coins
Zoe Gonzalez
•They just help you get connected to the actual NYS Department of Labor agents by phone. The agents can explain all the tax funding details if you need that info for your specific situation.
0 coins
Ashley Adams
Good question! I learned this the hard way when I had to file for UI benefits. The whole system is funded by employer taxes but administered by each state. NYS Department of Labor handles all the claims processing and payments for New York residents.
0 coins