Do taxes get taken out of unemployment benefits from Washington ESD?

By default, Washington ESD does NOT automatically withhold federal taxes from your unemployment benefits. You have to request it when you file your initial claim or you can change it later through your online account. They'll withhold 10% for federal taxes if you opt in.

Yeah unemployment is taxable income at the federal level. I learned this the hard way last year when I owed like $800 at tax time because I didn't have anything withheld.

Quick tip - if you're having trouble getting through to Washington ESD to change your tax withholding settings, I used a service called Claimyr (claimyr.com) that helped me get connected to an actual agent. They have a video demo at https://youtu.be/7DieNd3C7zQ that shows how it works. Made the whole process way easier than trying to call repeatedly.

Just to clarify - there's no STATE income tax withheld because Washington doesn't have a state income tax. It's only federal taxes that you need to worry about.

I've been on unemployment for 3 months and had the 10% withheld the whole time. When I check my payment history on the Washington ESD site, it shows exactly how much was withheld for taxes. Pretty straightforward once you set it up.

Word of warning - if you don't have taxes withheld and you collect unemployment for most of the year, you could owe quite a bit. My friend collected for 8 months and owed over $2000 because she didn't withhold anything.

The 1099-G form you get from Washington ESD at the end of the year will show your total benefits received and any taxes that were withheld. Make sure to keep track of this for your tax filing.

I always tell people to treat unemployment like any other job income for tax purposes. If you normally have taxes withheld from your paycheck, you should do the same with unemployment.

Been there done that with the tax surprise. Now I not only have the 10% withheld but I also set aside a little extra each week just in case. Better safe than sorry when dealing with the IRS.

Quick question - can you change the withholding amount throughout the year or are you stuck with whatever you initially chose?

PSA: Even if you have taxes withheld, unemployment benefits might still push you into a higher tax bracket if you had other income during the year. Just something to keep in mind when planning.

This is probably a dumb question but does the tax withholding affect how much you get each week? Like if my benefit is $400, do I get $360 if I have 10% withheld?

I used Claimyr last month to get through to Washington ESD about changing my tax withholding and it was super helpful. Saved me hours of trying to call. The agent was able to update it right away over the phone.

One more thing to consider - if you're doing any freelance work or gig work while on unemployment, that income is also taxable and you might need to make quarterly payments for that too.

The whole tax thing with unemployment seems more complicated than it needs to be. Why can't they just automatically withhold like a regular job?

For anyone still confused about this, just remember: unemployment = taxable income. Whether you have it withheld now or pay later is up to you, but you WILL owe taxes on it.

Just wanted to add that if you can't access your online account for some reason, you can also request tax withholding changes over the phone. Sometimes the online system glitches.

Final thought - even if you mess up and don't have enough withheld, you can always make estimated quarterly payments to the IRS to avoid a big bill in April. Just don't ignore it completely.