Wednesday, April 17, 2024

New York State Unemployment Tax

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Frustrations continue with NYS unemployment claims

Senator Alessandra Biaggi said, As legislators, we have a responsibility to provide relief to struggling businesses and workers not punish them. S6791A would do just that by reducing employers tax obligations, and increasing the maximum unemployment benefit over the next two years. This bill would provide significant relief to New Yorks businesses, particularly our small businesses, who have been hit hard by the COVID-19 pandemic. We cannot penalize businesses and workers for circumstances beyond their control, and must do our due diligence to support them. I am grateful to Senator Kaplan for championing this bill in the Senate, and I look forward to working with my colleagues to get this passed in the Legislature this session.

Senator Samra Brouk said, As New Yorkers respond to conducting business in a post-COVID world, and legislators and employers alike work to understand the barriers that keep people from returning to work, it is imperative that we take action to protect small business owners. By reducing the unemployment insurance burden, we are putting money back into local businesses to invest in their staff and customers. I look forward to working with my colleagues in the legislature to find additional opportunities to support our small businesses and working people.

Overview: What Is The State Unemployment Tax Act

When employees lose their jobs through no fault of their own, the state or territory where they work provides temporary compensation while they seek new work.

Through the State Unemployment Tax Act , states levy a payroll tax on employers to fund the majority of their unemployment benefit programs. Alaska, New Jersey, and Pennsylvania collect state unemployment tax from both employers and employees.

Employers also pay Federal Unemployment Tax Act taxes. The federal government uses the revenue to cover the administrative cost of state unemployment benefit programs.

Any amount your business pays in SUTA tax counts as a small business tax deduction.

When you pay SUTA taxes on time and file IRS Form 940, your FUTA tax rate goes down as low as 0.4%.

Federal Unemployment Tax Act

The Federal Unemployment Tax Act , authorizes the Internal Revenue Service to collect a Federal employer tax used to fund state workforce agencies. Employers pay this tax annually by filing IRS Form 940. FUTA covers the costs of administering the UI and Job Service programs in all states. In addition, FUTA pays one-half of the cost of extended unemployment benefits and provides for a fund from which states may borrow, if necessary, to pay benefits. Click here for IRS forms 940 and 940 Schedule A for FUTA year 2012 Federal Unemployment Taxes. The new forms have been updated to include the latest information for states with credit reductions for FUTA year 2012.

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Supplemental Unemployment Insurance Benefits During The Coronavirus Pandemic

The CARES Act and the American Rescue Plan established the following supplemental unemployment insurance programs during the coronavirus pandemic:

  • Federal Pandemic Unemployment Compensation

The Federal Pandemic Unemployment Compensation program aimed to provide qualifying unemployment insurance claimants with a supplemental $300-$600 per week in addition to their state unemployment insurance benefits. The program expired on September 6, 2021.

  • Pandemic Emergency Unemployment Compensation

The Pandemic Emergency Unemployment Compensation sought to provide 24 weeks of extended unemployment insurance benefits to recipients who have exhausted their standard benefits. The program expired on September 6, 2021.

  • Pandemic Unemployment Assistance

The federal Pandemic Unemployment Assistance program aimed to provide individuals who are out of work but ineligible for standard unemployment insurance benefits with $300-$600 in weekly compensation. Qualifying individuals included workers who are not eligible for standard benefits, such as independent contractors and self-employed workers, as well as individuals who have exhausted their standard benefits, extended benefits, or PEUC benefits. The program expired on September 6, 2021.

  • Lost Wages Assistance
  • Mixed Earners Unemployment Compensation

Cant Locate Your New York Payroll Account Numbers

Fast Unemployment Cost Facts for New York

To locate your New York Employer Registration Number:

  • Find this on any previously filed quarterly tax return .

To locate your New York Employer Withholding Identification Number:

  • Find this on any previously filed quarterly tax return .

  • Locate any of your previously filed federal tax returns .

Learn how to locate or obtain an EIN.

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Dont Get Hit With Unexpected Tax Bill From Unemployment Insurance Payments New York State Tax Department Shares Money

For Release: Immediate, Tuesday, September 22, 2020

For press inquiries only, contact: James Gazzale, 518-457-7377

The New York State Department of Taxation and Finance today encouraged New Yorkers to review their current tax situation. By taking a closer look at your tax records now, you can ensure you dont end up owing unpaid taxes, and you may be able to claim valuable tax credits when you file your income tax return next year.

We understand many New York taxpayers are facing challenges this year, which is why were reminding them of all the money-saving tax programs and refundable tax credits available, said New York State Commissioner of Taxation and Finance Mike Schmidt. 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.

Unemployment benefits are taxable benefits

If you are receiving unemployment benefits, consider having tax withheld from these payments to avoid owing taxes when you file your federal and New York State income tax return next year. New York State unemployment insurance benefits and any of the special unemployment compensation authorized under the Coronavirus Relief Act are considered taxable income. By law, the New York State Department of Labor must report these benefits to the IRS and to the New York State Tax Department.

Tax credits put money back in your pocket

How Much Tax Is Taken Out Of Unemployment Compensation

You can choose whether or not to withhold federal taxes at a rate of 10% if you collect unemployment benefits. Some states may allow you to withhold 5% for state taxes. You may have to pay estimated quarterly payments or pay taxes when you file your annual tax return if you dont have taxes taken out of your unemployment checks. Either way, your unemployment income is considered taxable income, just like any other wages or salaries you receive.

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New Yorks Trust Fund Is Chronically Insolvent

The COVID-19 labor shock was unprecedented in timing and size, and New York was among the earliest and hardest hit states, both in public health and economic impact. At the onset of the pandemic the national labor market declined 14 percent, while New York lost 20 percent of its jobs.12 Few states would be prepared to handle such sudden and drastic labor market upheaval as in NY.

Even before the historic COVID shock, New York struggled for decades to build up a sufficient balance in its Trust Fund. The State has not met USDOLs standard for solvency since 1974 and has borrowed from the federal government to meet UI claims during every recent recession.13

During the Great Recession, for example, New York began borrowing from the federal government to pay UI claims in 2008, and New Yorks debt grew to roughly $4 billion by 2012the highest level in history at the time.14 As a result, State tax rates increased to their highest range, and federal tax rates increased as New York received four FUTA tax credit reductions until the debt was fully paid off in 2015.

In 2013, following the Great Recession, the State enacted changes to the UI tax rate schedules and a gradual increase in the taxable UI wage base to build a greater Trust Fund balance for future economic downturns.15

Unemployment Insurance Is A State

NYS Unemployment Insurance filing issues

The U.S. unemployment insurance system is a partnership between states and the federal government. The U.S. Department of the Treasury sets the minimum benefit level and duration, while state governments establish specific design parameters, such as income replacement rates, and administer the UI systems.3

The Treasury holds a UI account in trust for each state, funded by a combination of state and federal taxes on employers. Each state sets its own UI tax rates, with revenues deposited into its trust fund account. While the federal tax rate is technically 6 percent on the first $7,000 of annual wages per employee, it is usually lowered by a federal unemployment tax credit. States without outstanding debt owed to the federal government have a net effective federal tax rate 0.6 percent, while those with a balance face a higher rate.4

If a states UI trust fund is depleted during periods of high claims, the Treasury provides a loan to cover benefit payments. The federal government may charge interest on UI loans if they are not repaid by the end of the federal fiscal year in which they were obtained, though these rules may be suspended during recessions and emergencies. A negative balance in a states trust fund, however, generally increases state and federal tax UI rates until it is paid off.5

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Withholding Taxes From Your Payments

If you are receiving benefits, you may have federal income taxes withheld from your unemployment benefit payments. Tax withholding is completely voluntary withholding taxes is not required. If you ask us to withhold taxes, we will withhold 10 percent of the gross amount of each payment before sending it to you.

To start or stop federal tax withholding for unemployment benefit payments:

  • Choose your withholding option when you apply for benefits online through Unemployment Benefits Services.
  • Review and change your withholding status by logging onto Unemployment Benefits Services and selecting IRS Tax Information from the Quick Links menu on the My Home page.
  • Review and change your withholding status by calling Tele-Serv and selecting Option 2, then Option 5.

Employer Contribution Rate Table

Rates of contribution. Each qualified employer’s rate of contribution shall be the percentage shown in the column headed by the size of the fund index as of the computation date and on the same line with his or her negative or positive employer’s account percentage, except that if within the three payroll years preceding the computation date any part of a negative balance has been transferred from any employer’s account as a charge to the general account pursuant to the provisions of paragraph of subdivision one of this section such employer’s rate of contribution shall be the maximum contribution rate as shown in the column headed by the size of fund index.

Vertical= Employer’s Account Percentage

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Balance Remains High Despite Recovery And Increased Ui Tax Collections

New Yorks ability to repay the federal loan is directly tied to the strength of its economic recovery and the tax rates levied on employers. State UI tax rates vary based on employers payroll, UI benefits paid to former employees and the size of the State UI fund balance. Collections of UI taxes are deposited to the States fund for the payment of benefits. Although unemployment decreased dramatically in 2021, total benefit payments remained greater than total UI tax collections, contributing to the persistently high balance in New Yorks outstanding loan.

Fewer Unemployed Individuals, Claims and Benefits Paid

Greater UI Tax Collections

State UI tax rates increased in 2021 from the prior year combined with employment growth, these increases have bolstered tax collections by more than 54 percent from $2.1 billion in 2020 to $3.2 billion in 2021. These revenues are used to fund benefit payments and pay down outstanding balances.7

New Yorks large repayments in May 2022, however, indicate greater movement towards paying down its current advance. If the overall trend of decreasing UI benefit payments continues, or such payments remain at recent levels, and UI tax collections continue to increase , New York will be able to continue taking fewer advances and making larger repayments.

FIGURE 2: New Yorks UI Experience During the COVID-19 Pandemic

New York Payroll Licensing

Unemployment rate increases in New York, Cayuga County

Harbor Compliance provides payroll tax registration services in every state to help your company hire employees and process payroll on time.

In most states, the two payroll taxes are withholding and unemployment insurance . Employers must register for the appropriate accounts in order to hire employees, to process payroll, and to file tax returns. Given the virtual, home-based, and temporary nature of employees, registrations often take place on short notice and in multiple states. Foreign qualification and registered agent are prerequisites in most states.

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What You Need To Know

Important Update: As of September 5, 2021, several federal unemployment benefit programs, including PUA, PEUC, EB, and FPUC, have expired, per federal law. For more information, visit

  • To collect regular unemployment insurance benefits, you must be ready, willing, and able to work.
  • Anyone calling from DOL will verify their identity by providing: the date you filed your application and the type of claim.
  • You will receive all benefits you are entitled to, including any backdated payments you are due.
  • If you are eligible, your first payment will generally be made in two to three weeks from the time your claim is completed and processed. In some cases, we must get additional information before payment can be made and your first payment may take longer. We use this time to review and process your application for benefits. You will not receive benefits during this period. This is why you may see your claim status as pending.

  • New Yorkers who are receiving Unemployment Insurance benefits are eligible for up to 26 weeks of benefits.

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New York Urged To Pay Down Federal Unemployment Debt

Democratic state lawmakers in a letter on Monday urged Gov. Kathy Hochul’s administration to repay the $8.1 billion owed to the federal Unemployment Trust Fund before a major increase in tax costs hit New York businesses later this year.

The letter, signed by 22 members of the state Assembly who represent suburban and upstate districts and released by Assemblywoman Carrie Woerner’s office, comes as New York largely remains an outlier among the states for the outstanding debt created by the economic crisis during the early months of the COVID pandemic.

“Making payments against the outstanding debt is the responsible thing to do allowing the debt to grow through non-payment will endanger the Stateâs ongoing economic recovery,” the lawmakers wrote in the letter. “We urge you to take immediate action to repay the loan.”

Lawmakers pointed to the cash coming to New York from mobile sports betting, as well as the surging sales tax revenue, as potential sources to help pay down the debt. Paying down the debt to avoid a looming tax hike for employers should be a priority, the lawmakers wrote.

The letter is the latest effort to raise alarms over the outstanding cost of unemployment insurance debt racked up by New York during the pandemic. A report released in June by Comptroller Tom DiNapoli’s office found the size of New York’s outstanding debt is second only to California, and is among only a handful of states yet to resolve the issue.

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File Quarterly Ui Tax Reports And Payments

Unlike other states, New York combines its UI tax and withholding tax reporting and payments. Reports and payments are due the last day of the month following the end of the quarter, as follows:


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What Qualifies As Unemployment Benefits

Businesses in this state face a $9 billion tax increase

The term unemployment benefits casts a wide net. It includes unemployment insurance benefits paid to you by your state, as well as railroad unemployment compensation benefits. It also includes any payments made to you by the Federal Unemployment Trust Fund and Federal Pandemic Unemployment Compensation.

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Do You Have To Pay Taxes On 600 Stimulus

The good news is that you dont have to pay income tax on the stimulus checks, also known as economic impact payments. The federal government issued two rounds of payments in 2020 the first starting in early April and the second in late December.

How much do you have to make to file taxes in Florida?

However, you would have to file a tax return if you earned $12,551 because youd have to pay income tax on that additional dollar of income. As of the 2021 tax year, the minimum gross income requirements are: Single and under age 65: $12,550. Single and age 65 or older: $14,250.

Are Florida unemployment benefits taxable?

The UI tax funds unemployment compensation programs for eligible employees. In Florida, state UI tax is one of the primary taxes that employers must pay. Unlike most other states, Florida does not have state withholding taxes.

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About State Unemployment Tax

When you have employees, you must pay federal and state unemployment taxes. These taxes fund unemployment programs and pay out benefits to employees who lose their jobs through no fault of their own.

Generally, unemployment taxes are employer-only taxes, meaning you do not withhold the tax from employee wages. However, some states require that you withhold additional money from employee wages for state unemployment taxes .

State unemployment tax is a percentage of an employees wages. Each state sets a different range of tax rates. Your tax rate might be based on factors like your industry, how many former employees received unemployment benefits, and experience.

State unemployment taxes are referred to as SUTA tax or state unemployment insurance . Or, they may be referred to as reemployment taxes .

You pay SUTA tax to the state where the work is taking place. If your employees all work in the state your business is located in, you will pay SUTA tax to the state your business is located in. But if your employees work in different states, you will pay SUTA tax to each state an employee works in.

States also set wage bases for unemployment tax. This means you only contribute unemployment tax until the employee earns above a certain amount.

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