New York Unemployment Taxes

[emilychan]

I elected to have my taxes withheld for unemployment payments last year and received a 1099G for it. However, it seems like I still owe the state nearly $1000. Before adding my 1099G info, I was set to receive a refund from the state. Can someone explain why I have to pay this much even though I withheld money from my unemployment payments?

[JotikaT2]

Unfortunately, we cannot see your tax return as this is a public forum.  

Did you enter your withholdings from your unemployment income?  I would review your input to ensure you entered it in the correct area.

You will review this information in the federal interview section.

1. Select Income & Expenses
2. Scroll down to All Income and select Unemployment
3. Select Unemployment and paid family leave
4. You will be able to enter your information from your Form 1099-G
5. On the screen titled Now fill in the rest of your 1099-G details, you will see a section for Box 4 - Federal income tax withheld and Boxes 10a-11 for state.  Enter your taxes paid in this section to ensure you receive credit for any withholdings on your federal and state tax returns.

[emilychan]

Thank you for your response. I have included the amounts I had withheld on this form and have received credit for what I previously had withheld. I'm just curious if it's normal to still have to pay nearly $1000 after the taxes were withheld? It just seems excessive....

[DawnC]

If you received a large amount of unemployment, yes, it is common to have a  tax bill despite withholding.   Most states only withhold 10% for federal tax which won't be enough if you are in a higher tax bracket and many people forego having any state tax withheld.     Make sure that you entered all the withholdings from your 1099-G for both federal and state and make sure the income was not listed twice.   

[emilychan]

@DawnC 

I have checked all my numbers and am sure I have entered everything properly.

I received about $14k in unemployment, paid $1500 in Federal taxes (which only affected my return by about $200) and also paid approximately $350 in state taxes, which caused me to go from having a state return to now owing nearly $1000... Is this normal or is something off?

[LenaH]

It depends. If unemployment is your only source of income, then something is not correct with the return. 

Since I do not know the details of your return and I am not sure whether you are using the standard or itemized deduction for New York, I will give you an example of tax assessed based on your full unemployment received. NYS tax tables show that for taxable income ranges that are between $14,000 to $14,050,  the income tax assessed is between $565 to $604 based on your filing status.

Please note, that if you are a NYC resident, you will have additional local taxes assessed on your income.

In addition, if you had more income on your return, you would most likely be in a higher tax bracket. NYS tax brackets range from 4% to 8.82%. If you withheld $350 for NYS out of $14,000 in unemployment, this comes to a withholding rate of 2.5%. 

@emilychan