What taxes are taken out of unemployment benefits from NYS Department of Labor?
I just got approved for unemployment after being laid off from my restaurant job last month. My first payment came through this week but I'm confused about the tax situation. Are taxes automatically taken out of my weekly unemployment payments? I heard some people say yes and others say no. I don't want to get hit with a huge tax bill next year. Can someone explain what taxes are taken out of unemployment benefits and if I need to do anything special?
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Marcus Marsh
Congrats on getting approved! For NYS Department of Labor unemployment benefits, federal taxes are NOT automatically taken out unless you specifically request it. You can choose to have 10% federal tax withheld when you file your weekly claims. There's an option in your online account to elect tax withholding. New York state doesn't tax unemployment benefits so you don't need to worry about state taxes being taken out.
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Katherine Shultz
•Oh wow I had no idea it was optional! So if I don't elect to have taxes taken out, I'll owe it all at tax time?
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Hailey O'Leary
Yes exactly - unemployment benefits are considered taxable income by the IRS but NYS Department of Labor doesn't automatically withhold anything. You'll get a 1099-G form at the end of the year showing how much you received. If you don't have taxes withheld, you'll need to pay quarterly estimated taxes or face a potentially large bill when you file. I learned this the hard way my first time on unemployment.
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Cedric Chung
•same here, owed like $2800 in taxes because I didn't know about withholding
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Talia Klein
Wait I'm confused - I thought I saw something about taxes when I was filing my weekly claim but I wasn't sure what it meant. Where exactly do I find the option to have federal taxes withheld? I've been getting payments for 3 weeks already.
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Marcus Marsh
•When you log into your my.ny.gov account and file your weekly claim, there should be a section asking about tax withholding. You can also change this retroactively by calling NYS Department of Labor, though getting through can be tough with their call volume.
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Maxwell St. Laurent
•Actually if you're having trouble getting through to NYS Department of Labor by phone, I recently found this service called Claimyr (claimyr.com) that helped me get connected to an actual agent. They have this demo video at https://youtu.be/qyftW-mnTNI that shows how it works. Might be worth checking out if you need to change your tax withholding settings and can't get through the regular way.
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PaulineW
Just to add - the 10% federal withholding might not be enough depending on your total income for the year and tax bracket. If you had a good job before unemployment you might want to consider making quarterly payments instead of just relying on the 10% withholding option.
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Annabel Kimball
ugh the whole tax thing with unemployment is so confusing, why can't they just make it simple like regular payroll taxes
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Freya Larsen
•I totally agree! Coming from restaurant work where taxes were automatically taken out of every paycheck, this whole "choose your own adventure" approach with unemployment taxes caught me completely off guard. It seems like they could at least make the default option more obvious or have better explanations during the application process.
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