Do you pay tax on unemployment benefits in Washington? Need to know before filing

I think I said no to the withholding because I needed every dollar I could get at the time. How much trouble am I in?

You're not in trouble, just need to plan ahead. You can still request tax withholding going forward through your Washington ESD account, and you should definitely set aside money for what you've already received.

About how much should I expect to owe? I've received around $8,000 so far.

Depends on your tax bracket and other income, but roughly 15-22% is a good estimate for federal taxes. So maybe $1,200-$1,800 on that $8,000.

Never heard of that but I'm definitely going to check it out. I've been dreading trying to call Washington ESD about this.

How much does something like that cost? I'm already strapped for cash as it is.

It's totally worth it when you consider how much time you save not sitting on hold for hours. Plus they make it really easy to use without having to give out a bunch of personal info.

Oh no, I had no idea about quarterly payments. How do I figure out how much to pay?

Use Form 1040ES to calculate estimated payments. You can also just set aside 20-25% of your remaining unemployment benefits to be safe.

This is getting complicated. Maybe worth talking to a tax professional at this point.

Federal taxes are the same everywhere, but state taxes vary. Washington is one of the states with no income tax, so you only owe federal taxes on unemployment benefits here.

oh ok that makes sense. glad i live in washington then lol

That's exactly what I'm worried about. How do I change my withholding through Washington ESD?

You can do it online through your SecureAccess Washington account or call them. Though calling is a pain - might be worth trying that Claimyr thing someone mentioned earlier.

I get the frustration, but unemployment is considered income replacement, so it makes sense that it's taxed like regular wages. At least in Washington we don't have to worry about state taxes on top of federal.

Yeah it sucks but it's been that way forever. Just gotta plan for it.

I've been doing some freelance work here and there. Do I need to report that to Washington ESD?

Yes, you have to report all income when you file your weekly claims. It might reduce your unemployment benefits for that week, but you have to report it.

When do they usually send those out?

Should be by the end of January. You can also access it online through your Washington ESD account once it's available.

Totally agree. They should make tax withholding the default option instead of making people choose.

That would definitely save people from getting surprised at tax time.

Good to know. Hopefully it won't come to that but it's reassuring to know there are options.

There was a temporary exclusion for unemployment benefits in 2020 due to COVID, but that's long gone. For 2024, it's back to normal - all unemployment benefits are taxable.

Thanks for clarifying. I was hoping maybe there was still some relief but makes sense that it's back to normal.

I did get a job recently but it's only part-time. Should I still mention the unemployment income?

Yes, especially if you're still collecting some unemployment benefits. All income for the year needs to be considered for tax planning.

Glad I'm not the only one who was clueless about this! Let me know how the Claimyr thing works out if you try it.

Yeah, I have friends in other states who get hit with both federal and state taxes on their unemployment. We definitely have it better here in Washington.

Same here! This has been way more informative than anything I could find on the Washington ESD website.

Starting tax withholding now won't reduce what you already owe on the $6,000 you received, but it will help cover the taxes on any future benefits you receive. You'll still need to set aside money for the taxes on that $6,000 - probably around $900-$1,300 depending on your tax bracket. The withholding going forward just prevents the hole from getting deeper.