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Zara Khan

Do I have to file taxes on unemployment benefits from Washington ESD?

Got my 1099-G form from Washington ESD yesterday and I'm confused about whether I need to report my unemployment benefits on my tax return. I received about $8,200 in UI benefits last year after being laid off from my warehouse job. I had taxes withheld from my weekly claims but I'm not sure if that's enough or if I still owe more. Has anyone dealt with this? Do unemployment benefits count as taxable income?

Yes, unemployment benefits are taxable income at the federal level. You'll need to report the full amount shown on your 1099-G form from Washington ESD. The taxes withheld from your weekly claims might not cover everything you owe depending on your total income for the year.

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Zara Khan

Author

So even though I had taxes taken out, I might still owe more? That's frustrating.

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It depends on your total tax situation. The withholding is often at a flat rate that might not match your actual tax bracket.

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I'm in the same boat. Got about $6,800 in benefits and had 10% withheld for taxes. Still trying to figure out if I need to file since it's my only income this year.

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You should definitely file even if it's your only income. You might actually get a refund if you had too much withheld.

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Really? I thought since it was under $12,000 I wouldn't need to file at all.

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Just went through this nightmare myself. Had to call Washington ESD three times to get my 1099-G corrected because they had the wrong withholding amount listed. If you're having trouble reaching them by phone, I found this service called Claimyr (claimyr.com) that helped me get through to an actual agent. They have a video demo at https://youtu.be/7DieNd3C7zQ showing how it works.

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Zara Khan

Author

How long did it take them to correct your 1099-G? I'm worried mine might be wrong too.

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About two weeks once I actually got through to someone. The Claimyr thing made the difference - saved me hours of trying to call.

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Wait, I never got a 1099-G form and I received benefits last year. Should I be worried? I moved apartments in December so maybe it got lost in the mail?

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You can access your 1099-G online through your Washington ESD account on SecureAccess Washington. Don't wait for the mail version.

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Thanks! I'll log in and check right now. I was starting to panic.

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The tax situation with unemployment is so confusing. I received benefits for about 8 months last year and had taxes withheld, but my tax preparer said I still owe $400 more. How is that even possible?

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The withholding is usually at 10% federal rate, but depending on your other income and filing status, your actual tax rate could be higher.

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Same thing happened to me. The withholding doesn't account for state taxes either if you live in a state that taxes unemployment.

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Pro tip: if you're still receiving benefits, you can change your withholding amount for future payments. I increased mine to 15% to avoid owing next year.

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Zara Khan

Author

How do you change the withholding amount? Is it in the weekly claim system?

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Yes, there's an option when you file your weekly claim. You can also call Washington ESD to change it, though good luck getting through.

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Don't forget that if you received unemployment benefits, you might qualify for the Earned Income Tax Credit or other credits that could reduce what you owe. Make sure to check all available credits when filing.

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I didn't know unemployment benefits could qualify you for tax credits. That's actually helpful information.

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I made the mistake of not having any taxes withheld from my unemployment thinking I wouldn't owe much. Ended up owing $1,200 at tax time. Learn from my mistake and always have something withheld.

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Zara Khan

Author

Ouch, that's a expensive lesson. At least I had taxes withheld from the start.

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Yeah, I thought I was being smart keeping more money each week. Definitely wasn't worth the tax bill later.

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Question about the 1099-G form - does it include all types of benefits or just regular UI? I received some standby benefits too and I'm not sure if those are reported separately.

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All unemployment compensation should be on the same 1099-G form, including standby benefits. It's all taxable income.

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Good to know. I was worried I might be missing another form somewhere.

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The whole system is ridiculous if you ask me. You're already struggling financially and then they want to tax the money they give you to survive. Makes no sense.

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I get the frustration but unemployment benefits are essentially replacing your taxable wages, so it makes sense they'd be taxed the same way.

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I guess that's one way to look at it, but it still feels like a kick when you're down.

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Filed my taxes last week and got a $300 refund even though I received unemployment benefits. Had taxes withheld and my total income was low enough that I got money back. Don't assume you'll owe money.

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That gives me hope! I was dreading doing my taxes thinking I'd owe a bunch.

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Yeah, definitely worth filing even if you think you might not need to. You never know.

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For anyone still struggling to get through to Washington ESD about tax questions, I had success using that Claimyr service someone mentioned earlier. Got connected to an agent in about 10 minutes instead of the usual hours of busy signals.

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Zara Khan

Author

I might have to try that if I can't figure out my withholding question. The regular phone line is impossible.

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How much does Claimyr cost? I'm hesitant to pay for something when I should be able to call for free.

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Been doing taxes for 20 years and unemployment taxation hasn't changed much. It's always been taxable income. The key is making sure you have enough withheld or setting aside money for taxes if you don't.

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Zara Khan

Author

Wish I had known to set aside extra money. I spent most of my benefits on necessities.

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That's understandable when you're just trying to get by. The withholding should cover most of it in your situation.

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Quick question - if I received benefits in 2024 but some payments came in January 2025, which year do I report them for? The dates on my 1099-G are confusing.

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You report them for the year you actually received the money, not when you earned it. So January 2025 payments go on your 2025 tax return.

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That makes sense. Thanks for clarifying that timing issue.

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The bright side is that if you're back to work now, next year's taxes should be more straightforward without the unemployment complications. Hang in there everyone!

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Zara Khan

Author

Thanks for the encouragement! Hopefully I won't need to deal with unemployment taxes again.

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Same here. Ready to have regular W-2 income again and leave all this unemployment stuff behind.

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One last thing - if you can't afford to pay what you owe from unemployment taxes, the IRS has payment plan options. Don't just ignore it and hope it goes away.

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Zara Khan

Author

Good to know there are options if I end up owing more than expected. Thanks for all the helpful advice everyone!

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