Tax season is stressful enough as is, but the state is hoping to help by spreading awareness now, instead of surprising people.
Money received through unemployment is taxable income, which means for families that have been getting state and federal assistance throughout the COVID-19 pandemic, there could be a much bigger bill come April if you don't start preparing now.
What You Need To Know
- 3.3 million New Yorkers received unemployment benefits this year
- That money is taxable income at both state and federal levels
- The earlier you start withholding, the better chance you have of avoiding a tax bill
The good news is you can help yourself out by getting started now. All it takes is the push of a button. Here are the steps:
- Login to labor.ny.gov/signin with your NY.gov ID
- Click “Unemployment Benefits”
- Click “Payment and Tax Withholding Options”
- Click “Tax Withholding” and follow the instructions
The sooner you start, the better, as each check that comes in non-withheld has the potential to increase your tax bill early next year. According to New York State Department of Taxation and Finance Commissioner Mike Schmidt, as many of the 3.3 million New Yorkers are receiving unemployment benefits this year and many may have chosen not to withhold, partly because they didn't know they could.
"Unemployment has been such a source of incredible economic support for so man; we also just want to make sure it's not a surprise come next tax filing season," Schmidt said.
In January, families that received unemployment will need to find and fill out a 1099-G along with their W-2, which will show benefits received from the government.