Do you pay tax on unemployment benefits from Washington ESD?

Ugh, that's what I was afraid of. Do I need to set aside money from each payment or can I just deal with it at tax time?

It's usually better to set aside about 10-22% of each payment depending on your tax bracket. You can also have taxes withheld from your weekly claims if you want.

When you file your weekly claim online, there's an option to have federal taxes withheld at 10%. You just check the box each week when you certify.

Thanks! I'm going to start doing that this week. Better safe than sorry.

Ouch, that's a big hit. Did you have to pay penalties too?

Yeah, had to pay interest and a penalty. The whole thing was a nightmare. That's why I'm warning everyone now.

How much does that cost? I'm already tight on money with just the UI payments.

It's worth it when you need to actually talk to someone at Washington ESD. Way better than calling hundreds of times and getting nowhere.

Exactly! I feel like they should mention it when you first apply or at least send some kind of notice.

There actually is information about taxes on the Washington ESD website, but it's buried in the FAQ section. Most people probably never see it.

How do you calculate quarterly payments? This is getting complicated.

Use Form 1040ES. It has worksheets to help you estimate. Or consult a tax professional if your situation is complex.

Same here! Better late than never I guess.

Unemployment benefits are always taxable income federally, regardless of your total income. However, if your total income is below the filing threshold, you might not owe any taxes overall.

That makes sense. I'll probably still owe something since I worked part of the year before getting laid off.

True, but sometimes it takes a while to find something decent. At least knowing about the tax withholding option helps.

Wait, I did some Uber driving last month. Do I need to report that on my weekly claim?

Yes, absolutely! Any income from work needs to be reported, even if it's just a few hours of gig work. Washington ESD will reduce your weekly benefit accordingly.

How long did it take with Claimyr?

Maybe 15 minutes total? Way better than the 3 hours I wasted trying to call directly.

Yes, Washington ESD will send you Form 1099-G in January showing total benefits paid and taxes withheld. Keep this with your tax documents.

Perfect, thanks! I want to make sure I have everything I need for my tax return.

The Washington ESD system only offers the 10% federal withholding option. If you need more taken out, you'd have to make estimated payments yourself.

Got it. I'll probably stick with 10% and see how it goes when I file my return.

Totally agree. The whole system could be more user-friendly about important details like this.

That's my plan. Going to start the withholding this week and put aside some money from my previous payments.

Smart move. It's better to be prepared than get hit with a big tax bill later.

The 10% withholding comes out of your weekly benefit payment, so yes, you'll receive less money each week. But it's better than owing a lump sum at tax time.

Makes sense. I'd rather have less each week than get surprised by a big tax bill.

That's a good idea if you have the discipline to actually do it every week.

True, it takes discipline. The automatic withholding through Washington ESD is probably easier for most people.

Good to know there's a way to actually reach someone when you need help. The regular phone system is a joke.

Yeah, Claimyr made it so much easier. Worth using when you actually need to talk to a real person at Washington ESD.

Glad this helped! I'm feeling much better about the whole tax situation now too.

Happy to help. Tax planning is so important when you're on unemployment. Good luck with your job search!