I received unemployment for a few months in 2022 and then got a job. Will I owe addition taxes in 2023 due to unemployment?

[mohamedeid]

I was on unemployment briefly in 2022, from January to April (I received it as back payment in April from when I lost my job in January). The value was a little over $2,000 and I opted to withhold federal taxes (I live in CA). Now I'm employed, and I'm worried that I'm going to get a smaller tax return because the taxes I withheld from unemployment won't be enough.

Last year there was an issue where the 10% CA withheld for unemployment wasn't enough, so we owed additional taxes despite opting to withhold them. 

The way unemployment works with a salary is very confusing to me. I already withheld federal taxes from unemployment, I don't want to owe more from my jobs salary or have my tax return reduced.

[VolvoGirl]

All you can do is enter everything into Turbo Tax next year and see.  If you think you won't have enough withholding you can increase your job withholding to cover it or send in an extra estimated payment.

Here are the blank Estimates and instructions…..

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

The 1040ES quarterly estimates are due April 18, June 15, Sept 15 and Jan 17, 2023.  Your state will also have their own estimate forms.

Or you can pay directly on the IRS website https://www.irs.gov/payments

Be sure to pick the right kind of payment and year.....2022 Estimate

[rjs]

The tax is not calculated separately on the unemployment and your salary. The tax that is withheld from your unemployment is not specifically the tax on the unemployment, and the tax withheld from your salary is not specifically the tax on your salary. Any tax that is withheld from any income is just an advance payment towards your total tax for the year.

On your tax return, all of your income is added together. The tax is calculated on your total income. All the tax that was withheld from anywhere is added together and applied towards your total tax for the year.

You can use the Tax Withholding Estimator on the IRS web site to see how you are likely to come out at the end of the year. It will also show you how your can adjust your W-4 to get the approximate refund amount that you want.

[Opus 17]

If you had the minimum withheld (10%) then it probably wasn't enough.  The extra tax on the benefit would reduce your refund or increase your tax owed.  I would use the IRS tax estimator to see where you are, and adjust your W-4 if needed.  If you really want a large refund, you have to have more money taken out of each paycheck, and you do that through the W-4.