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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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I was unemployed in 2009 and paid federal taxes on the benefits.

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I was unemployed in 2009 and paid federal taxes on the benefits. I was never given the option to have state taxes (New York) taken out so I assumed the benefits were state tax-exempt. I got a letter from Albany 2 days before Christmas this year telling me I was audited and owe the back taxes from 2009 by January 4th. Can these grinches really do this?
Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

Thank you for your question, and I'm sorry to hear about your situation. I'm sorry that the timing was less than perfect, I mean...Christmas...couldn't they at least wait until after the New Year?

Unfortunately, New York unemployment benefits are taxable at the state level. Some states do not tax unemployment benefits, but New York does. So, sadly - the answer is yes, the state can do this. CLICK HERE

You can, however, contact them and see if you could get an extension to pay or set up a payment plan. This may help you not incur such a big hit all at once.

Again, I'm sorry that this happened to you. I wish I had better news for you, but I don't. If you need further clarifications on this, please let me know. Thanks again for using and have a happy, and safe, New Year.

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You should be aware that your question, as with most tax questions, can never really be answered completely...addressing all the permutations; that is because of the many assumptions that have to be made I have done my best to determine what I think you are asking and answering it in the most direct and understandable manner possible. If, however, after reviewing the questions, you have any uncertainties or further questions, please do not hesitate to ask.

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