What if I already paid taxes on unemployment - NYS Department of Labor overpayment notice confusion

Unfortunately paying taxes on unemployment benefits and owing an overpayment are two completely separate issues. When NYS Department of Labor says you were overpaid, it means they determined you received benefits you weren't eligible for in the first place. The taxes you paid were on income you legally received at the time, but if they later decide you shouldn't have gotten those benefits, you have to pay back the full amount regardless of taxes paid. You should appeal this overpayment notice within 30 days if you believe you were eligible for those benefits.

yeah this happened to my brother last year, he had to pay back like $3k even though he paid taxes on it. the tax thing is totally separate from the overpayment thing apparently

I had a similar situation and couldn't get through to NYS Department of Labor for weeks to understand why I owed money back. Finally used Claimyr (claimyr.com) to actually reach an agent who explained the whole overpayment calculation. They have a video demo at https://youtu.be/qyftW-mnTNI that shows how it works. The agent was able to walk through my specific case and show me exactly which weeks were considered overpaid and why. Turns out I had reported my work hours correctly but there was an employer wage report that didn't match up.

Wait I'm confused - if we pay taxes on unemployment money doesn't that mean the government thinks we were supposed to get it? Why would they let us pay taxes on money we weren't supposed to receive??

THE WHOLE SYSTEM IS A JOKE! They make you jump through hoops to get benefits, then demand the money back AFTER you've already been taxed on it. And good luck getting anyone on the phone to explain what happened. I've been dealing with an overpayment for 8 months now and still don't have a clear answer about why I supposedly owe $4,200.

Just wanted to add that if you do end up having to pay back the overpayment, you can potentially claim it as a deduction on next year's tax return under the claim of right doctrine. Not tax advice obviously but worth asking a tax professional about.

I went through this exact same thing last year and it's incredibly frustrating. The key thing to understand is that NYS Department of Labor overpayments are usually based on either unreported income, work search requirements not being met, or employer wage reports that contradict what you certified. The taxes you paid don't factor into whether you were eligible - they're completely separate processes. My advice: 1) Request a detailed breakdown of exactly which weeks they're claiming as overpaid and why, 2) Gather all your documentation from that period (work search logs, income reports, etc.), and 3) Appeal within the 30-day window even if you're not sure - you can always withdraw the appeal later but you can't file one after the deadline. Don't let them just take your word for it that you owe the money without proving exactly how they calculated it.