Do you have to file unemployment benefits on your taxes in Washington?

Yes, unemployment benefits are taxable income at the federal level. Washington state doesn't have income tax so you don't worry about state taxes, but you'll definitely need to report it on your federal return. Washington ESD should send you a 1099-G form in January.

i made this mistake last year and owed like $800 in taxes because i spent all my unemployment money thinking it was free money lol. definitely have them take out taxes or save some yourself

You can change your tax withholding election in your Washington ESD account online. Log into your account, go to the payment options section, and you'll see the federal tax withholding option. I'd recommend doing 10% withholding to be safe.

If you're having trouble getting through to Washington ESD to make changes to your account, I found this service called Claimyr that helps you actually reach an agent by phone. They have a website at claimyr.com and there's a demo video at https://youtu.be/7DieNd3C7zQ showing how it works. Saved me hours of trying to call and getting busy signals.

WAIT hold up - I thought unemployment wasn't taxable because it's insurance that we paid into through our jobs??? This doesn't make sense to me at all. Why would they tax money that's technically ours already?

Just make sure you keep good records of everything. When I got my 1099-G last year it had the wrong amount on it and I had to call Washington ESD to get it corrected. That was a nightmare to deal with.

Does anyone know if the tax withholding applies to all types of unemployment? I'm on standby status through my union and wondering if that's different.

I'm a tax preparer and see this confusion every year. Yes, ALL unemployment benefits are taxable income. The 1099-G you'll receive will show the total amount you received. If you didn't have taxes withheld, you'll likely owe money when you file.

This is exactly why I always tell people to treat unemployment like any other job income. Set aside money for taxes, keep records, don't spend it all thinking it's free money. Basic financial planning stuff.

Pro tip: if you're already working again and off unemployment, you can still make estimated tax payments quarterly to avoid a big bill in April. The IRS has worksheets to help you calculate how much to pay.

One thing to watch out for - if you received unemployment in 2024 and also worked part-time, make sure your employer didn't mess up your W-2. Sometimes they incorrectly include unemployment benefits which can cause double reporting.

I used Claimyr last month to get through to Washington ESD about changing my withholding election and it worked great. Much better than spending hours on hold. The agent was able to update my account immediately.

For what it's worth, I've been on unemployment twice and both times I just had them withhold 10% for federal taxes. Never owed anything extra and sometimes got a small refund. Just depends on your situation.

Remember you can also deduct job search expenses on your taxes if you're looking for work while on unemployment. Things like resume services, job fair travel, interview clothes, etc. Keep receipts!

Just wanted to add that if you're collecting unemployment and also doing gig work (like DoorDash or Uber), make sure you report ALL that income to Washington ESD. They cross-reference with tax records and you can get in trouble for not reporting side income.

Bottom line - treat unemployment like regular income because that's what it is for tax purposes. Have taxes withheld if you want to keep it simple, or set aside money yourself if you prefer more control. Just don't ignore it and hope it goes away.

One more plug for Claimyr if anyone else needs to reach Washington ESD quickly - I've used them twice now and both times got through in under 10 minutes instead of hours of busy signals. Check out their demo video if you're curious how it works.