Why did my NY unemployment tax withholding not cover what I owe on taxes?

This is actually pretty common with unemployment benefits. The standard withholding on unemployment in NY is only 10% for federal taxes, and many people don't realize they need to have state taxes withheld separately. Also, when you combine unemployment with regular wages, it can push you into a higher tax bracket, which means the 10% withholding wasn't enough to cover what you actually owe.

yep same thing happend to me. i was shocked. got like $3000 back in 2024 but this year only $326 because of the unemployment. tax system is a JOKE.

You can adjust your withholding amount on unemployment. The default is 10% federal withholding only, but you need to specifically request state tax withholding as well by filing a specific form with NYSDOL. For 2025 taxes, that's Form UI-W4V. Too late for this year's taxes though, unfortunately. Another factor: unemployment benefits are fully taxable income. If you and your daughter both had regular jobs plus unemployment in the same year, your total income was higher, which often pushes you into a higher tax bracket than the standard withholding accounts for.

I had this EXACT problem last year!!! I was counting on my refund for a car repair and then BOOM, almost nothing left after entering my unemployment. The system is designed to screw us over I swear. They don't make it clear AT ALL that 10% withholding isn't enough and you need to call to get state taxes taken out too. I was fuming when I found out.

Try to reach the tax department at NYSDOL to see if there's anything they can do. I was in a similar situation and they were actually helpful when I finally got through to someone. It took me 3 days of calling though, which was beyond frustrating. Have you tried using Claimyr to get through to an agent? It helped me bypass the phone wait times. Their website is claimyr.com and they have a demo video at https://youtu.be/Rdqa1gKtxuE that shows how it works. Seriously saved me hours of redial frustration when I needed to sort out my tax withholding issues.

For next time (if you ever need unemployment again), make sure you request additional withholding. The default 10% federal withholding is rarely enough, especially if you have other income. You can actually request up to 22% federal withholding plus state tax withholding. For your current situation, you might be able to set up a payment plan with the IRS if you can't pay what you owe right now. Don't ignore it though - penalties add up fast!

this is y i always put aside extra $ when on unemployment. the government NEVER takes out enough lol learned that the hard way

Also, just to clarify what might be happening with your daughter's taxes specifically - if she's a dependent on your tax return but filed her own return for her unemployment, that could create additional tax complications. Dependents have different standard deductions and tax structures than independent filers.

my brother inlaw works for h&r block and he says this happens ALL the time with unemployment. the system is totally broken but nobody fixes it. they should just automatically take out the right amount instead of making it so complicated!!!!

For everyone reading this thread with similar issues: If you're currently receiving NY unemployment benefits and want to avoid this situation next tax season, call NYSDOL and request both the federal Form W-4V to increase your federal withholding above 10% AND the NY State Form IT-2104-E for state tax withholding. Don't assume the default withholding will be enough, especially if you have other income sources during the same tax year.