Do taxes pay for unemployment benefits in Washington - confused about funding

So I don't owe anything back to Washington ESD? Just regular income tax on what I received?

Correct, you don't owe Washington ESD anything back (unless there's an overpayment issue). But yes, you'll get a 1099-G form and need to report the UI benefits as income on your tax return.

That's correct for Washington state. Employees don't pay UI taxes here. Some states do have employee contributions but Washington is employer-funded only.

wow i had no idea. so basically my old job is paying for my unemployment right now?

Not exactly your specific job, but all employers in Washington pay into a pooled system that funds everyone's benefits. It's like insurance - everyone pays in so benefits are available when needed.

How much does something like that cost? I'm already on a tight budget with unemployment.

They focus on just helping you get through to Washington ESD agents when you need to actually talk to someone. Worth checking out their site for the details.

Never heard of this but might be useful. I've been trying to reach Washington ESD about my adjudication status for weeks.

What's an experience rating? My boss mentioned this when I got laid off but I didn't understand.

Experience rating is basically how Washington ESD determines your employer's tax rate. Companies with more layoffs and UI claims pay higher rates. It incentivizes employers to maintain stable employment.

This explains why my manager was so weird about me filing for unemployment. He kept asking if I was sure I wanted to file.

You can have federal taxes withheld from your UI benefits if you want. When you file your weekly claim, there's an option to have 10% withheld for federal taxes. Washington state has no income tax so no state withholding needed.

Oh I didn't know I could do that! I've been filing weekly claims for 6 weeks without any withholding.

Same here! Can I change this retroactively or just going forward?

You can only change it going forward. For past weeks, you'll need to set aside money for taxes or adjust your withholding at your next job.

that actually makes sense when you put it that way

Except it's not optional insurance - employers have to participate by law.

Not directly, but your claim can affect their future tax rates. Washington ESD tracks claims against each employer for their experience rating calculation. More claims generally mean higher future tax rates for that employer.

Is that why some employers contest unemployment claims?

Yes, exactly. If they successfully contest your claim and you're found ineligible, it won't count against their experience rating.

Is this like a paid service? I'm hesitant to spend money when I'm unemployed.

Check out their website claimyr.com - they explain how it works. I found it worth it compared to the hours I was wasting trying to get through.

Perfect summary! Just remember to report the income on your tax return next year.

And consider having taxes withheld from future weekly benefits if you're concerned about owing at tax time.

Because every claim potentially increases their future tax costs. Some companies try to discourage filing or contest claims to keep their experience rating low.

That seems unfair if it's supposed to be insurance for employees.

It is unfair, but it's legal. That's why Washington ESD has protections against employer retaliation for filing legitimate claims.

Thanks for the insider perspective! Do you know roughly what percentage of payroll goes to unemployment taxes?

It varies widely based on experience rating, but typically ranges from 0.1% to 6% of taxable wages in Washington. New employers start at a standard rate around 2.7%.

Exactly! You earned these benefits through your work history. Don't feel guilty about using a system that exists specifically to help workers between jobs.

Good to know! I was wondering if pandemic changes were still in effect.

Nope, we're back to the pre-pandemic system. Much simpler funding structure now.

I might try this. I've been trying to get clarification on my tax withholding options for weeks.

Definitely worth it. The video demo on their site shows exactly how it works: https://youtu.be/7DieNd3C7zQ

That makes sense. I was wondering why the job search requirements were so detailed.

Right - they need to balance supporting unemployed workers with maintaining the integrity of the employer-funded system.

Glad we could help! The funding structure can be confusing but it's important to understand.

Same here - I was stressed about the tax implications but now I understand how it all works.

Good point! I've been wondering about taking some gig work but wasn't sure how it would affect my claim.

You can usually earn up to your weekly benefit amount before seeing reductions, but report all earnings when you file your weekly claim.

Great idea to share! These funding questions come up a lot and there's a lot of misinformation out there.

Interesting economic perspective! Never thought about it that way.

It's all interconnected, but for practical purposes, workers don't need to worry about 'paying back' the system beyond normal income taxes on benefits received.

Agreed! Would have saved me weeks of worry if I'd found this information sooner.

That's a really important distinction! So many people don't realize that contractor status affects unemployment eligibility. @47cadd29bd78 if you're classified as a 1099 contractor, you'd need to look into other options during unemployment periods - maybe forming an LLC and paying into the system as a business owner in some states, or having an emergency fund since traditional UI isn't available.