Do they take taxes out of unemployment benefits in Washington ESD?

Washington ESD doesn't automatically withhold federal taxes from your unemployment benefits unless you specifically request it. You need to submit a Form W-4V or update your tax withholding preferences in your online account.

Oh wow I had no idea! So I'm getting the full amount now but will owe taxes later?

Exactly. Unemployment benefits are considered taxable income by the IRS. You'll get a 1099-G form at the end of the year showing how much you received.

yeah I made this mistake last year and owed like $800 in taxes because I didn't have anything withheld from my UI payments

That's exactly what I'm trying to avoid! How do I set up the withholding?

Log into your SecureAccess Washington account and look for tax withholding options in your profile settings. You can choose to have 10% federal tax withheld from each payment.

I've been trying to update my tax withholding for weeks but keep getting error messages on the Washington ESD website. Anyone else having technical issues with this?

I had the same problem! Couldn't get through on the phone either to fix it. Then someone told me about claimyr.com - they help you actually reach Washington ESD agents. There's even a demo video at https://youtu.be/7DieNd3C7zQ showing how it works.

Really? I've never heard of that service. Does it actually work for getting through to Washington ESD?

Yeah it worked for me. I was able to talk to someone about my tax withholding issue within a couple days instead of calling for weeks and never getting through.

Just a heads up - Washington state doesn't have state income tax so you only worry about federal taxes on your unemployment benefits. That's something at least!

Good point! I forgot about that since I moved here from California last year.

The default is NO withholding so you get the full benefit amount each week. Most people don't realize unemployment is taxable income until tax season hits them hard.

This is why I always tell people to set aside at least 10-15% of their unemployment payments for taxes. Better safe than sorry.

That's smart advice. I think I'll do that and also try to get the automatic withholding set up.

Wait so if I already received several payments without withholding can I still set it up now or do I have to wait until next year?

You can set up withholding anytime during your claim. It will apply to future payments, but obviously won't affect payments you already received.

Ok that makes sense. I better get on that then since I still have about 15 weeks left on my claim.

Pro tip: even with 10% withholding you might still owe taxes depending on your other income and tax situation. It's not always enough.

This is true. I had 10% withheld and still owed about $200 more at tax time because of my spouse's income.

Ugh this is getting complicated. Maybe I should talk to a tax person about this.

The 1099-G form Washington ESD sends you will show the total benefits paid and any federal taxes withheld. Keep that for your tax filing!

When do they usually send those forms out? Is it by mail or electronic?

Usually by end of January. You can access it electronically through your SecureAccess Washington account or they'll mail a paper copy.

I called Washington ESD about this exact question last month and was on hold for 3 hours before getting disconnected. So frustrating!

This is exactly why I started using Claimyr. No more sitting on hold for hours just to get basic questions answered about my unemployment benefits.

I'm definitely going to check that out. This whole process has been such a headache.

Does anyone know if the tax withholding applies to the $600 extra we used to get during COVID or just the regular state benefits?

All unemployment compensation is taxable, including any federal supplements that were added during the pandemic period. But those programs ended a while ago.

Right, I was just curious about my 2021 taxes since I'm still dealing with some paperwork from that year.

Honestly the Washington ESD website could be so much clearer about this tax stuff. I had to dig around forever to find the withholding option.

Agreed! They should make it more prominent during the initial claim filing process.

Yeah I never saw anything about taxes when I filed my claim originally.

For anyone still confused - yes unemployment is taxable federally, no withholding by default, and you can change it anytime. Simple as that.

Thanks for the clear summary! Sometimes these threads get way too complicated.

Just wanted to add that if you're doing gig work while on partial unemployment, that income is also taxable separate from your UI benefits. Don't forget about 1099s from apps like DoorDash etc.

Good reminder! I have been doing some delivery work on the side.

And make sure you're reporting that gig income on your weekly claims too or you could have issues with Washington ESD.

The whole tax situation with unemployment benefits is honestly one of the most confusing parts of the system. Wish they explained it better upfront.

Totally agree. I'm definitely going to set up withholding now though thanks to everyone's advice here.

Smart move. Better to have a little less each week than get hit with a big tax bill later.