NYS Department of Labor unemployment tax withholding - how much taxes does unemployment take out?

NYS Department of Labor offers 10% federal tax withholding on unemployment benefits, which is the standard rate. You can elect this when you file your weekly claims or change it anytime through your my.ny.gov account. Keep in mind unemployment is fully taxable as ordinary income, so depending on your tax bracket you might need to make quarterly estimated payments if 10% isn't enough.

I made the mistake of not withholding anything last year and owed like $2800 when I filed my taxes. The 10% option through NYS Department of Labor is definitely worth it even if you end up getting a small refund.

You can also make estimated quarterly tax payments directly to the IRS if you think 10% isn't enough. For your income level, you'll probably want to withhold the full 10% and maybe make a small estimated payment in Q4 depending on how long you're on unemployment. The NYS Department of Labor withholding is only for federal taxes - you'll still need to handle state taxes separately when you file.

honestly the whole tax thing with unemployment is so confusing!! i just picked yes for withholding and hoped for the best lol. better safe than sorry right?

If you're having trouble getting through to NYS Department of Labor to change your withholding election, I had success using Claimyr to reach an agent directly. They helped me update my withholding preference without waiting on hold for hours. Check out claimyr.com - they have a video demo at https://youtu.be/qyftW-mnTNI that shows exactly how it works.

For someone at your income level ($65k), the 10% federal withholding should be pretty close to what you'll owe. At $504 weekly that's about $50.40 withheld per week. Since unemployment benefits are taxed as ordinary income, you'd likely be in the 22% marginal bracket, but remember that's only on the unemployment income portion. The 10% withholding plus any taxes from other income/jobs should keep you from owing too much. You can always adjust it later if you find a job quickly or if your situation changes. I'd definitely recommend starting with the 10% - it's much better than getting hit with a big tax bill next April!

Just wanted to add that you can also check your withholding amount on each payment stub when you get your unemployment benefits deposited. The NYS Department of Labor will show exactly how much was withheld for federal taxes, so you can keep track throughout the year and see if you need to make any adjustments. I started with 10% withholding and it worked out perfectly for my situation - ended up getting a small refund instead of owing anything. Also worth noting that if you do find work before the year is up, you might want to adjust your W-4 at your new job to account for any under-withholding from the unemployment period.