NYS Department of Labor unemployment tax withholding - how much taxes does unemployment take out?
I just started collecting unemployment benefits and I'm confused about the tax situation. When I certified my first weekly claim, there was an option to have taxes withheld but I wasn't sure what percentage to choose. How much taxes does unemployment take out if you elect withholding? I don't want to owe a huge amount when I file my return next year. My weekly benefit amount is $504 and I'm not sure if I should have NYS Department of Labor withhold 10% or if that's not enough. Anyone know what the standard withholding rate is for unemployment benefits?
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NeonNebula
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.
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Diego Chavez
AuthorThanks! So 10% should cover most people? I was making about $65k before I got laid off so I'm worried 10% won't be enough.
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Anastasia Kozlov
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.
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Sean Kelly
Ouch! That's a painful lesson. I always elect the withholding just to be safe.
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Zara Mirza
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.
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Diego Chavez
AuthorWait, the 10% doesn't cover NY state taxes too? I thought it was for both federal and state.
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Zara Mirza
No, the NYS Department of Labor withholding option is only for federal income tax. New York doesn't tax unemployment benefits though, so you only need to worry about federal taxes on your UI payments.
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Luca Russo
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?
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Nia Harris
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.
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Diego Chavez
AuthorThat's helpful, I was wondering how to change the withholding if I needed to. The my.ny.gov portal seems to glitch out whenever I try to update anything.
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Ella Russell
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!
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