Do you pay tax on unemployment benefits in Washington - confused about my 1099-G

Oh no, I never saw that option! Where exactly do you find it on the weekly claim form?

It's usually near the end of the weekly claim questions, asks if you want federal and/or state taxes withheld. I think it's 10% federal and like 5% state if you choose both.

$900?! That's terrifying. Did you have to pay it all at once or could you set up a payment plan?

set up payment plan with irs, wasn't too bad actually. just make sure you file even if you can't pay the full amount right away

I did work for about 4 months after I found a new job. Would that help with the tax situation?

Definitely! Check your W-2 from your new job to see how much federal and state tax was withheld. That goes toward your total tax liability for the year, including the unemployment income.

this is why i always tell people to have taxes taken out of their UI payments. saves so much stress at tax time

That sounds really helpful! I've been trying to call Washington ESD for weeks to ask about this stuff but can never get through.

How much does that service cost? I'm already stressed about owing taxes, don't want to spend more money if I don't have to

I think it was worth it just to finally talk to someone who could explain everything properly. Much better than spending hours trying to get through on the phone for free and never reaching anyone.

Yeah I definitely never saw that information anywhere obvious when I was filing my claims.

They really should make it more clear when you first apply. Like a big warning or something.

Yes, definitely consider having taxes withheld! You can change it on your next weekly claim. Better to get a smaller payment each week than a big tax bill later.

How do I change it? Is there a form I need to fill out or is it just part of the weekly claim questions?

It's part of the weekly claim process. When you file your next claim, look for the tax withholding questions. You can choose federal only, state only, or both.

Oh my god that's even worse than what I'm expecting. Are you able to pay that much all at once?

Definitely not! But apparently both the IRS and Washington state allow payment plans. I'm going to set those up as soon as I file my return.

payment plans are pretty easy to set up online, did it last year when i owed the state like $400

I understand the frustration, but unemployment is considered income replacement, so it gets taxed like the wages it's replacing would have been.

Still doesn't make it right. They should at least make the tax withholding automatic or mandatory so people don't get surprised like this.

some states do make it clearer but washington really could do better about warning people upfront

How do you calculate how much to pay quarterly? That sounds complicated.

You can use the estimated tax worksheets on the IRS website, or honestly just divide your expected annual tax liability by 4. It's not perfect but it's close enough.

60%?! That's crazy that so many people get caught off guard by this.

did the agent say anything about whether they'll ever make tax withholding the default option?

She said there's been discussion about it but no concrete plans yet. For now they're just trying to make the information more visible during the application process.

That's a good point, I hadn't thought about credits. I should probably just bite the bullet and pay someone to do my taxes this year since this is all so confusing.

Might be worth it for peace of mind, especially if your situation is complicated with multiple jobs and unemployment in the same year.

Maybe set a reminder on your phone or something? This seems like an expensive mistake to keep making!

yeah i really should. it's just that when you're stressed about money the last thing you want is to make your weekly payment even smaller

Wait, I thought Washington doesn't have state income tax? I'm even more confused now.

You're right - Washington has no state income tax. You'll only owe federal taxes on your unemployment benefits. That should make your situation a bit better than you were expecting!

Oops, you're totally right! I was thinking of a different state. Just federal taxes for Washington residents.

That's the second person who mentioned that service. Might have to look into it since I still have questions about how this all works.

Same experience here - couldn't get through the regular way but Claimyr worked great. Sometimes you just need to talk to an actual person to understand this stuff.

Really? I definitely spent money on interview clothes and gas driving to job fairs. How do you claim those?

You'd need to itemize deductions instead of taking the standard deduction, so it only helps if your total itemized deductions are more than the standard amount. But keep those receipts just in case!