ALBANY, N.Y. – With so many jobs lost throughout the coronavirus pandemic, the New York State Department of Taxation and Finance is reminding people that unemployment insurance benefits count as taxable income.
Officials at the department advise those on unemployment to consider having tax withheld from benefit payments, to avoid owing federal and state taxes at the end of the year.
“We know that many taxpayers are facing challenges this year, and we want to remind them of all the valuable tax credits available here in New York,” said Mike Schmidt, the state commissioner of taxation and finance “We also want taxpayers to understand that unemployment insurance payments are taxable. As a result, some taxpayers may need to adjust their withholding to prevent a tax bill in 2021.”
Payments received through special unemployment programs under the Coronavirus Relief Act are also considered taxable income. This would include money paid through programs like Pandemic Unemployment Assistance, Pandemic Unemployment Compensation and Pandemic Emergency Unemployment Compensation.
To review unemployment payment records and adjust tax withholdings, do the following:
- Log in to unemployment account at Department of Labor website
- Click “Unemployment Benefits”
- Click “Payment and Tax Withholding Options”
- Click “Tax Withholding” and follow the instructions
Anyone who collected unemployment benefits in 2020 will receive a Form 1099-G in January of 2021, showing all payments that must be reported on tax returns.
