NYS Department of Labor unemployment compensation federal tax treatment for 2023 - confused about reporting
I received unemployment benefits from NYS Department of Labor throughout 2023 and I'm really confused about how to handle this on my federal taxes. My total UI payments were around $8,200 for the year. I know they sent me a 1099-G form but I'm not sure if I need to report the full amount as taxable income or if there are any deductions I can take. Has anyone dealt with this for their 2023 taxes? I'm worried I'm going to owe a bunch of money I wasn't expecting since I didn't have taxes withheld from my weekly claims.
10 comments
Join the conversation
Dylan Mitchell
Yes, unemployment compensation is fully taxable as ordinary income on your federal return for 2023. The entire amount shown on your 1099-G from NYS Department of Labor needs to be reported on line 7 of Form 1040. Unlike 2020 when there was a $10,200 exclusion, there's no special tax break for unemployment in 2023. If you didn't have federal taxes withheld from your weekly claims, you'll likely owe taxes on that income at your regular tax rate.
0 coins
Fatima Al-Maktoum
•Ugh that's what I was afraid of. So if I'm in the 22% tax bracket, I'm looking at owing around $1,800 in taxes on my unemployment? That's a huge hit.
0 coins
Sofia Gutierrez
same boat here, got about 6k in UI benefits and didn't realize it was all taxable until now... why doesn't NYS Department of Labor make this clearer when you file your weekly claims?
0 coins
Dmitry Petrov
•They actually do mention it during the initial claim process, but it's easy to miss. When you first file, there's an option to have 10% federal tax withheld from your benefits. Most people skip it because they need the full amount for bills, but it would have saved you from owing a lump sum now.
0 coins
StarSurfer
Just a heads up - if you owe more than $1,000 in taxes and didn't pay quarterly estimates, you might face an underpayment penalty. However, you can avoid penalties if you paid at least 90% of this year's tax liability or 100% of last year's liability through withholding from other income sources.
0 coins
Ava Martinez
Wait I'm confused - do I report state taxes too? My 1099-G shows both federal and state taxable amounts but New York doesn't tax unemployment benefits right?
0 coins
Dylan Mitchell
•Correct, New York State does not tax unemployment benefits, so you only need to worry about federal taxes. The state portion on your 1099-G should show zero or you can ignore it for NY state return purposes.
0 coins
Miguel Castro
Had this exact issue last year and couldn't get through to anyone at NYS Department of Labor to clarify the tax situation. Ended up using Claimyr (claimyr.com) to actually reach a real person who explained the whole tax withholding process. They have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. Wish I had known about the tax implications before I started collecting benefits.
0 coins
Fatima Al-Maktoum
•Thanks for the tip! I might need to call them anyway because my 1099-G amount doesn't match what I calculated from my payment history.
0 coins
Zainab Abdulrahman
Pro tip: if you're filing taxes yourself, make sure you're using the correct amount from Box 1 of your 1099-G, not Box 2. Box 1 is the total unemployment compensation paid, Box 2 is federal income tax withheld (which will be zero if you didn't elect withholding). Also double-check that the 1099-G includes all your benefit weeks - sometimes there are processing delays that can affect the reported amounts.
0 coins