Do you file taxes on unemployment benefits from Washington ESD?

Yes, unemployment benefits are definitely taxable income at the federal level. Washington doesn't have state income tax so you don't worry about that part. You should have received a 1099-G form from Washington ESD showing how much you received in 2024. If you didn't have taxes withheld, you'll likely owe money when you file.

Oh no, I haven't gotten any 1099-G form yet. When should that arrive?

They're usually mailed by January 31st. You can also access it online through your SecureAccess Washington account if you're signed up for electronic delivery.

I made the same mistake last year - didn't have taxes taken out and ended up owing $2,800 at tax time. You can elect to have 10% federal taxes withheld from your weekly benefits through your online account. I wish someone had told me this earlier!

Wow, $2,800 is a lot! How do I set up the tax withholding for future payments?

Log into your Washington ESD account and look under 'Payment Options' - there should be a tax withholding election you can change.

This is such a common problem. I've been trying to reach Washington ESD for weeks to get my 1099-G corrected because they have the wrong amount listed. The phone lines are always busy and I can't get through to anyone. Has anyone had luck reaching them lately?

I had the exact same issue with my 1099-G being wrong. I discovered this service called Claimyr that helps you get through to Washington ESD agents. Check out claimyr.com - they have a video demo at https://youtu.be/7DieNd3C7zQ showing exactly how it works. It saved me so much time and frustration.

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

Yeah, it connects you directly to actual Washington ESD agents. I was skeptical at first but it worked perfectly for getting my tax document issue resolved.

Just a heads up - if you received unemployment in 2020 there was a special tax break that year where the first $10,200 wasn't taxable. But that was only for 2020. For 2024, all unemployment income is taxable federally.

Wait, so 2024 unemployment is fully taxable? I thought there might still be some COVID relief for taxes.

Nope, all the COVID tax relief for unemployment ended after 2020. Everything you received in 2024 counts as regular taxable income.

I'm in the same boat as OP. Been on unemployment since August and never elected tax withholding. Now I'm panicking about what I'll owe. Should I start setting money aside now?

Yes, definitely start setting aside money. A good rule of thumb is to save about 15-20% of your unemployment benefits for taxes, depending on your other income and tax bracket.

Ugh, I wish I had known this months ago. Better late than never I guess.

Does anyone know if job search expenses can be deducted to offset some of the unemployment tax liability? I've spent quite a bit on gas, printing resumes, etc.

Job search expenses used to be deductible but that changed with the 2017 tax law. Most job search costs are no longer deductible for employees, unfortunately.

That's disappointing. Seems unfair that we have to pay taxes on unemployment but can't deduct job search costs.

The Washington ESD website has a whole section about taxes and unemployment. They explain that you can change your withholding election at any time, not just when you first file. Might be worth checking out if you're still receiving benefits.

Thanks, I'll look for that section. Do you remember where on the site it was?

I think it was under the 'Managing Your Claim' section, but I'm not 100% sure. The search function on their site should help you find it.

Just got off the phone with a tax preparer and they said unemployment benefits are treated exactly like wages for tax purposes. So if you normally get a refund from your job income, the unemployment might reduce that refund or make you owe money instead.

That makes sense. I usually get a small refund so I'm probably going to break even or owe a little bit.

Yep, that's exactly what happened to me. Went from expecting a $1,200 refund to owing $400.

Pro tip: if you can't afford to pay what you owe all at once, the IRS has payment plan options. Don't just ignore it if you end up owing money on your unemployment benefits.

Good point. The IRS is usually pretty reasonable about setting up payment plans if you contact them proactively.

Exactly. Much better to work with them than to just hope they forget about it.

I've been having issues getting through to Washington ESD to ask about my tax withholding options. Their phone system is terrible. Anyone else having this problem?

Yeah, I gave up trying to call them directly. I ended up using Claimyr to get through - it was super easy and I got connected to a real person within minutes. They helped me update my tax withholding preferences right away.

Is that the service someone mentioned earlier? Might have to check that out if I can't get through on my own.

Yeah same one. Really saved me a lot of headache trying to navigate their phone system.

For anyone still confused about this - think of unemployment benefits like any other income. You'll get a 1099-G instead of a W-2, but it goes on your tax return just like wages from a job. The only difference is taxes probably weren't automatically withheld.

That's a really helpful way to think about it. So it's just like getting paid by an employer who doesn't withhold taxes.

Exactly! And just like with any other income, you're responsible for paying the taxes whether they were withheld or not.

I hate that they don't automatically withhold taxes from unemployment. It should be opt-out, not opt-in. So many people get surprised at tax time.

I totally agree. It seems like they're setting people up to fail by not withholding by default.

Yeah, especially when people are already financially stressed from being unemployed. The last thing they need is a big tax bill.

Quick question - if I just started collecting unemployment in December 2024, will I still get a 1099-G for just that one month?

Yes, you'll get a 1099-G for any amount you received in 2024, even if it was just for part of December. It all counts as 2024 income.

Good to know. I was wondering if there was some minimum threshold before they issue the form.

The Washington ESD customer service for tax questions has been pretty good in my experience. I called the general number and they transferred me to someone who specifically handles tax-related issues. Much more helpful than the regular claim agents.

Really? I've been trying to reach them for weeks with no luck. What time of day did you call?

I called right when they opened at 8 AM on a Tuesday. Took about 20 minutes on hold but I got through.

I've tried that approach multiple times with no success. I think I'm going to try that Claimyr service people have mentioned. Seems like it might be worth it just to save the time and frustration.

Just want to add that if you had other income during the year along with unemployment, make sure you consider your total income when estimating your tax liability. The unemployment might push you into a higher tax bracket.

Good point. I worked for about 4 months before getting laid off, so I'll need to factor in both my W-2 and the unemployment income.

Exactly. The combination might surprise you, especially if you didn't have taxes withheld from the unemployment portion.