Unemployment is taxable on your federal return and it is taxed by the state of New York. If you did not have tax withheld from your unemployment --- or not enough withheld---you are now facing the lowered refund because of the extra taxable income you received.
If you did not pay enough taxes on your unemployment during the year, you may have to pay taxes on it when you complete your tax return. The IRS considers unemployment compensation as taxable income, as do most states. When you combine it with your other income received during the year, it will be taxed at whichever tax bracket you are in.
The difference between what your tax liability is and what you withheld is the amount you owe. Since you stated that you owe taxes and your refund went down after entering your unemployment compensation, your tax bracket is higher than the percentage you withheld on your unemployment.
TurboTax has a great tool that can help you withhold the correct amount of tax on your income sources. Please see Tax Bracket Calculator for a better estimate on what should be withheld.
Yes I am aware of that. I had taxes withheld and it did not give an option on how much they withheld neither. I had received unemployment in the past in the same year I had a job and do not recall my federal being lowered and owning state taxes back.
I could not finish my sentence due to the limited characters. Unemployment does not give an option on how much tax is taken out. They give you an option to not have taxes withheld or for taxes to be taken out. I had a job from January through June and collected unemployment from July through Jan until I received a job. I am now unemployed again due to the center downsizing. There is no way really to have more taxes taken out to avoid paying back anything?