Do unemployment benefits get taxed in Washington - confused about tax implications

I honestly don't remember choosing anything about taxes when I filed. How can I check if they're withholding taxes from my weekly claims?

Log into your Washington ESD account and check your payment history. It should show if federal taxes are being withheld. If not, you'll need to contact Washington ESD to start withholding or set aside money yourself.

Oh no, that's exactly what I'm afraid of! How much were you receiving per week? I'm getting about $650 weekly so I'm trying to figure out how much I might owe.

i was getting around $500/week for most of 2024, ended up with about $13k in benefits total. the tax hit was brutal since i didnt have anything withheld

I've been trying to call Washington ESD for weeks about another issue and can never get through. Is there an online way to change the tax withholding?

Unfortunately, tax withholding changes usually require speaking with a representative. The online system doesn't have that option available.

I had the same problem reaching Washington ESD until I found Claimyr. It's a service that helps you get through to ESD agents - they have a website at claimyr.com and there's a demo video at https://youtu.be/7DieNd3C7zQ showing how it works. I was able to get through and change my withholding the same day.

That's good to know about no state taxes. So if I have 10% withheld for federal taxes, that should cover what I owe?

It depends on your total income and tax bracket. 10% might not be enough if you're in a higher bracket or have other income. You might want to consult with a tax professional or use tax software to estimate.

That was only for 2020 tax year and only for the first $10,200 of unemployment benefits. Since 2021, all unemployment benefits have been fully taxable again.

Ugh, I wish they made this clearer when you file for benefits. I had no idea I'd owe taxes on this money.

Right? They should make it way more obvious that this is taxable income. I feel like most people don't realize this until it's too late.

Exactly! I'm going to try calling Washington ESD tomorrow to get withholding started, but I'm not optimistic about getting through.

That's smart advice. I'm going to start doing that with my next payment. Better late than never I guess.

Yeah, I learned this lesson the hard way with my first unemployment claim years ago. Now I always have taxes withheld from day one.

Good to know about the 1099-G. Will that be mailed to me or available online somewhere?

should be available in your esd account online, but they might mail it too. i always download a copy just in case

How does Claimyr work exactly? Do they charge a lot for the service?

They basically keep calling Washington ESD for you until they get through, then connect you to the agent. There's a cost but it's worth it compared to the time and frustration of trying to call yourself. Check out their demo video to see how it works.

Ouch, that's a lot! How much were you receiving per week if you don't mind me asking?

I was getting about $580 per week for 8 months. The tax bill was definitely a shock since I wasn't expecting it.

That's good to know. I hope I don't need a payment plan but it's reassuring to know it's an option.

Yeah, the IRS is actually pretty reasonable about payment plans as long as you communicate with them. Much better than trying to ignore a tax bill.

Wish someone had told me that when I first filed for benefits. I just assumed since it was government assistance it wouldn't be taxed.

It's a common misconception! A lot of people think government benefits aren't taxable, but most of them actually are.

That's reassuring. I'm going to try to get the withholding started ASAP so I don't end up with a huge tax bill.

Good plan. Even if you only get it started for the last few months of your claim, it's better than nothing.

Yeah, I definitely don't have extra money sitting around to pay a big tax bill. I need to get this sorted out.

exactly, most people on unemployment dont have extra cash lying around for taxes. get the withholding started or start saving money now

I think I'm going to try Claimyr too. I've wasted so much time trying to call Washington ESD and never getting through.

Definitely recommend it. The peace of mind of actually talking to someone at ESD is worth it, especially for something important like tax withholding.

I'm not working right now, just collecting full unemployment benefits. But that's good to know for the future.

Good, that makes the tax calculation a bit simpler. Just the unemployment income to worry about for now.

Exactly! It feels like such a catch-22. You need the money to survive but then you'll owe taxes on it later.

Yeah, it's definitely frustrating. But at least now you know and can plan for it going forward.

That's probably the safest approach. I'd rather get a refund than owe money I can't afford to pay.

Exactly. When you're unemployed, cash flow is everything. A tax refund is much better than a tax bill.

Usually it takes effect with your next weekly payment after the change is processed. So if you make the change on a Tuesday, it should start with that week's payment.

Good to know, thanks! I want to make sure I understand the timing when I call to make the change.

Glad I'm not the only one who learned something new! I feel much better about dealing with this now.

Same here! Always good to know you're not alone in figuring out these confusing unemployment rules.