Do you pay income tax on Washington ESD unemployment benefits?

Yes, unemployment benefits are considered taxable income by the IRS. You'll get a 1099-G form from Washington ESD showing how much you received. You can have federal taxes withheld by logging into your account on secure.esd.wa.gov and updating your tax withholding preferences.

I made this mistake last year and owed like $2,800 in taxes on my unemployment. Definitely set up withholding or put money aside every week. The good news is Washington state doesn't tax unemployment so you only worry about federal.

You should definitely set up tax withholding ASAP. Log into your Washington ESD account, go to 'Payment Information' and you can choose to have 10% withheld for federal taxes. It's much easier than trying to save money on your own or getting hit with a big bill.

I had such a hard time getting through to Washington ESD to ask about this tax stuff. Their phone lines are always busy and the website doesn't explain everything clearly. Finally found this service called Claimyr that helped me get connected to an actual agent who walked me through setting up the tax withholding. Check out claimyr.com - they have a video demo at https://youtu.be/7DieNd3C7zQ that shows how it works.

wait unemployment is taxable?? I thought government benefits weren't taxed. This is news to me and I've been on UI since September...

The 1099-G form usually comes out in January. Make sure Washington ESD has your current address because they'll mail it to you. You need this form to file your taxes correctly.

I set up 10% federal withholding from the start and it worked out pretty well. Got a small refund actually because I didn't work much last year. Better safe than sorry with taxes.

Does anyone know if you can deduct job search expenses when you're on unemployment? Like gas money for interviews, resume printing, etc?

Update: I logged into my Washington ESD account and set up 10% federal tax withholding. Was pretty easy to find under payment options. Thanks everyone for the advice!

Just want to add that if you worked part of the year before going on unemployment, make sure to factor in your W-2 income too when thinking about taxes. Your total income for the year determines your tax bracket.

The Washington ESD website actually has a whole section about taxes and unemployment benefits if you want to read more details. It's under the 'Tax Information' tab I think.

Another thing to remember is that if you move to a different state while on Washington ESD unemployment, you might have to deal with that state's tax rules too. Though most states don't tax unemployment benefits.

I used to work in tax prep and saw so many people get surprised by unemployment taxes. The withholding option is definitely the way to go if you don't want to deal with a big bill later.

For anyone who's already received a lot of unemployment without withholding, you might want to make estimated tax payments quarterly to avoid owing too much at once. The IRS has worksheets to help calculate this.

The amount of unemployment benefits that are taxable can also depend on your other income and filing status. If your total income is low enough, you might not owe much tax anyway.

Just wanted to follow up on the Claimyr thing I mentioned earlier. I actually used them again last week to get help with updating my direct deposit info and it worked great. Really saves time compared to trying to get through on your own.

One more tax tip - keep good records of your unemployment payments and any taxes withheld. Makes filing your return much easier if you have everything organized.

Thanks for posting this question! I had no idea about the tax implications and I've been on unemployment for 6 weeks. Going to set up withholding right now.

The tax withholding really is the easiest way to handle this. I've had it set up from day one and haven't had to worry about setting money aside or calculating payments.

For anyone still confused about this stuff, the IRS also has Publication 525 that explains what types of income are taxable, including unemployment benefits. It's pretty detailed if you want to dive deep into the rules.