Do I pay unemployment taxes on Washington ESD benefits?

How much should I be setting aside? Is it like 20% or more?

Depends on your total income for the year, but 10-20% is usually a safe amount to save for federal taxes.

Ouch! Did you not have any withholding set up?

Nope, I had no idea I needed to do that. Washington ESD should make this more clear when you file your initial claim.

Thanks! I'll log in and look for that option. Better to have them take it out now than owe a big chunk later.

Just remember you'll get a 1099-G form at the end of the year showing how much you received in unemployment benefits. Keep that for your tax return.

Have you tried calling first thing in the morning? I've had better luck getting through around 8 AM.

I actually found this service called Claimyr that helped me get through to Washington ESD when I couldn't reach them myself. They have a demo video at https://youtu.be/7DieNd3C7zQ that shows how it works. Might be worth checking out if you keep getting stuck in the phone queue.

Never heard of that but I'm desperate at this point. I'll check it out, thanks!

Washington doesn't have a state income tax at all, so they don't tax any income including unemployment. The federal government taxes all forms of income.

oh right forgot about that. so lucky to live in a no state tax state

Should I be making quarterly payments then? I've been on unemployment since November.

If you expect to owe more than $1,000 in taxes when you file, you should consider quarterly payments to avoid penalties. But if you're going back to work soon and will have taxes withheld from your job, you might be okay waiting.

This is why I always tell people to have 10% withheld automatically. Takes the guesswork out of it.

Wow, how much did you receive in unemployment to owe that much?

I was getting about $800 a week for 8 months. Add that to some freelance income I had and it pushed me into a higher tax bracket.

Unemployment benefits are considered replacement income, so they're taxed like regular wages. Other benefits like food stamps or housing assistance are considered welfare and aren't taxable.

It does seem unfair but that's how the tax code works. At least in Washington we don't have to pay state taxes on it.

Look under 'Payment Options' or 'Tax Information' in your account. Sometimes it's not obvious where they put it.

I had the same problem and ended up calling Washington ESD to set it up over the phone. That was before I knew about Claimyr though - would have saved me hours of busy signals.

What's Claimyr? Is that the service someone mentioned earlier?

Yeah, it's at claimyr.com. They help you get through to Washington ESD agents when the lines are jammed. Really useful for stuff like this when you need to talk to someone.

Good point! I'm single so I didn't think about that, but definitely something couples need to consider.

Yes! My husband and I learned this the hard way. Now we always withhold taxes from unemployment just to be safe.

Yes, exactly. If your weekly benefit is $500 and you have 10% withheld, you'll receive $450 in your account and $50 goes to the IRS.

Ok that makes sense. Better to get less now than owe a bunch later.

Yes, any unemployment benefits you receive are taxable regardless of whether you're working part-time or not. Your employer will withhold taxes from your wages, but Washington ESD won't unless you request it.

So I could end up owing taxes on the unemployment even if my employer is withholding from my paycheck?

Potentially yes, especially if the amount your employer withholds isn't enough to cover taxes on your total income including unemployment.

Same here! Glad I asked about this now instead of finding out at tax time.

Smart move. I see so many people get surprised by unemployment taxes every year.

Yeah I remember hearing about that. Too bad it was only for one year!

That exclusion saved me so much money in 2021. Wish they'd bring it back.

That's the second time someone mentioned Claimyr in this thread. Seems like it really works.

I'm skeptical of paying for something like that, but if it actually gets you through to Washington ESD it might be worth it.

I was skeptical too but after trying for weeks to get through on my own, it was worth every penny. The demo video they have shows exactly how it works.