Do you pay federal taxes on Washington ESD unemployment benefits?

Thanks! Where do I find the tax withholding option when I file my weekly claim?

When you log into your Washington ESD account to file your weekly claim, there should be a section asking if you want federal taxes withheld. It's usually near the end of the claim form.

Ouch! Did you have to pay penalties too or just the tax amount?

Just the tax amount thankfully, but it was still a shock when I filed my return.

Good advice! I keep screenshots of all my payment confirmations just in case.

That was only for 2020 - the first $10,200 of unemployment benefits weren't taxed that year. But since 2021, all unemployment benefits are fully taxable again.

Ah okay thanks for clarifying!

I had the same problem until I found Claimyr.com - they actually get you through to a real Washington ESD agent. Used it last month and was talking to someone within 20 minutes. They have a video demo at https://youtu.be/7DieNd3C7zQ showing how it works.

Really? I'll check that out, thanks! Getting so frustrated with the busy signals.

How does Claimyr work exactly? Is it legit?

Yeah it's legitimate - basically they handle the calling and waiting for you, then connect you when an agent picks up. Saved me hours of redialing.

Good point, I do some gig work on the side. Should I adjust my withholding percentage then?

Might be worth talking to a tax professional about that, especially if the gig work income varies a lot.

No, Washington state doesn't have a state income tax, so you only need to worry about federal taxes on your unemployment benefits.

That's a relief, thanks!

Washington ESD usually sends 1099-G forms out by the end of January. If you moved, make sure your address is updated in your ESD account before then. You can also access it online through your account.

Thanks, I'll double-check my address is current.

Yes, any amount of unemployment benefits needs to be reported as income, even if it's just a few hundred dollars. The IRS gets a copy of your 1099-G too, so they'll know if you don't report it.

Got it, better safe than sorry. Thanks!

Totally agree! Would save so many people from getting surprised at tax time.

The problem is some people need every dollar they can get and can't afford to have taxes taken out upfront.

Yes, standby payments from Washington ESD are treated the same as regular UI benefits for tax purposes. They'll all show up on your 1099-G.

Perfect, that's what I thought but wanted to confirm. Thanks!

Was there a cost for using Claimyr?

There is a fee but honestly it was worth it to actually talk to someone and get my withholding set up properly. Way less stressful than the phone runaround.

Good to know! Hopefully I won't need that but it's reassuring to have options.

I believe you have to elect it again when you file a new claim, but I'm not 100% sure. That might be a good question for a Washington ESD agent.

Yeah I'll try to get through to them and ask. Thanks!

Glad it helped! You'll thank yourself next tax season.

Same here - definitely setting up withholding after reading all this.