A whole lot of Unemployment Insurance was released at the start of the pandemic when businesses were shut down or furloughed. For New Yorkers, people could receive up to $504/week (depending on how much they earned during the year), plus an additional $600/week for a limited period of time of Pandemic Insurance regardless of yearly earnings. The number of weeks a person could receive Unemployment Benefits within the year was also extended, and on December 29, 2020, was extended again into 2021.

Receiving Unemployment Insurance proved difficult, as so many people were applying at one time, and many for the first time. The New York Department of Labor’s website crashed regularly, and calling in to a person was nearly impossible, according to Gothamist and other publications. New York State partnered with Google to fix the state’s website and increase the servers powering the website from 4 servers to 50, according to Syracuse.com.

According to data analyzed by lohud.com, unemployment claims in the Hudson Valley totaled 149,134 for the time period of March 14 through April 25, 2020. The previous year during the same time was 9,344 claims. That is an increase of 1,496%.

As of today, after the passage of 2 pandemic stimulus packages, Unemployment Insurance remains taxable, as it is viewed as income, which means that if you received Unemployment Insurance, you need to either check a box that you want taxes withheld from your unemployment benefit check, or “put aside 20% federal and 6% NYS,” advises Arthur DeDominicis, a local CPA in Fishkill.

New York’s Department of Taxation and Finance issued a reminder that citizens could opt in to having taxes taken out of their benefit checks, thereby removing the problem of needing to save money to pay it the following year. The reminder included directions on how to opt-in to having taxes taken out. Otherwise, recipients of Unemployment Insurance have the option of paying in quarterly estimates, or figuring it into their year end tax filing, the legwork for which starts right now.

Recipients of the benefit will receive a 1099-G from New York State. Other unexpected income tax situations can include large payouts from things like Travelers Insurance. If you bought Travelers Insurance on a plane ticket, then got delayed and were reimbursed for your hotel, clothing and food, a 1099 will also arrive in the mail to be included in the year end tax filing, and added to your overall income.

Six states do not charge their citizens income tax on benefits, according to Experian.com, and those include: Alabama, California, Montana, New Jersey, Pennsylvania and Virginia. Seven states do not charge income tax at all, and those include: Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming.

Unemployment Insurance was extended for 2021, with legislation signed by Governor Cuomo on December 29, 2020, that outlines how additional weeks of benefits will work, including an additional $300/week supplement for those who meet the requirements. There is a new compensation opportunity for self-employed people called the “Mixed Earner Unemployment Compensation” program (MEUC), which is defined as: “benefits are provided for individuals who earned at least $5,000 a year in self-employment income but are disqualified from receiving more substantial PUA benefits because they may be eligible for traditional state UI,” according to a press release by the governor.

Might New York State wave collecting tax on Unemployment Insurance? Might the new federal administration wave charging federal income taxes on Unemployment Insurance this year? Unlikely, but maybe if you ask…