An Important Message for NYS Residents: Unemployment Benefits Are Taxable

by | Oct 26, 2020 | IRS & Government

If you are receiving unemployment benefits, consider having tax withheld from these payments to avoid owing taxes when you file your federal and New York State income tax return next year. New York State unemployment insurance benefits and any of the special unemployment compensation authorized under the Coronavirus Relief Act are considered taxable income. By law, the New York State Department of Labor must report these benefits to the IRS and to the New York State Tax Department.

We encourage you to review your records and, if necessary, adjust your tax withholdings. You can change your tax withholding option on the DOL website. Doing this could help you avoid a tax bill next year. To start or stop the withholding of federal or state taxes from your weekly benefits:

  1. Login to labor.ny.gov/signin with your NY.gov ID
  2. Click “Unemployment Benefits”
  3. Click “Payment and Tax Withholding Options”
  4. Click “Tax Withholding” and follow the instructions

If you received unemployment benefits or any of the special unemployment compensation authorized under the Coronavirus Relief Act, both are taxable income and should be reported on your return.  You may need to go to the Department of Labor’s website to get your 1099-G from your account.  The 1099-G should show both the amount received and any amount of tax withheld.

Source: www.tax.ny.gov

  • Tax Analyst

    I am Naveed Lodhi, an Enrolled Agent with 12 years of experience in individual tax preparation. My professional journey began after achieving a Master's Degree in Taxation from Golden Gate University. This advanced education has equipped me with deep knowledge and skills in U.S. tax laws, essential for providing expert advice and service.

    Working as a Content Strategist for the IRS.gov website I developed informative content that helps Americans understand complex tax regulations easily. With years of hands on experience as a Senior Tax Analyst, I have prepared and reviewed thousands of tax returns and I’m sharing what I have learned with you.

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