Do you pay taxes on unemployment benefits in Washington - confused about tax implications

Yes, unemployment benefits are considered taxable income by the IRS. Washington state doesn't have a state income tax, so you only need to worry about federal taxes. You should have received a 1099-G form from Washington ESD showing the total amount you received.

I made the same mistake last year - didn't withhold taxes from my UI benefits and ended up owing about $1,800 when I filed. If you're still collecting benefits, you can request tax withholding through your Washington ESD account to avoid this problem next year.

This is so frustrating! I've been trying to call Washington ESD for weeks to ask about my 1099-G because the amount looks wrong, but I can never get through. The phone system just hangs up on me after being on hold forever.

wait so even though washington doesnt have state income tax we still pay federal tax on unemployment? that doesnt seem right

For anyone wondering, the tax rate depends on your total income and filing status. If unemployment was your only income, you might not owe much or anything at all depending on the amount. But if you had other income too, it could push you into a higher tax bracket.

The IRS treats unemployment the same as regular wages for tax purposes. One thing people don't realize is that you can still claim the standard deduction and other credits which might reduce what you actually owe.

I'm in the same boat - got unemployment last year and now stressed about taxes. Has anyone used those free tax prep services? I can't afford to pay someone to do my taxes.

Pro tip: if you can't pay the full amount you owe, the IRS has payment plans available. Don't just ignore it because the penalties and interest add up fast.

Another thing to consider - if you received unemployment in 2020 or 2021, there was a special exclusion that let you exclude up to $10,200 from taxes. But that was only for those years, not for 2024 benefits.

Just want to emphasize - make sure the amount on your 1099-G is correct before filing. I had to get mine corrected because Washington ESD included some payments that were later recouped due to an overpayment issue.

THE GOVERNMENT TAXES EVERYTHING including money they give you when you lose your job through no fault of your own. It's ridiculous that they don't automatically withhold taxes like they do with regular paychecks.

File your taxes even if you can't pay right away. The penalty for not filing is much worse than the penalty for not paying on time.

For what it's worth, I calculated my taxes and even with $12,000 in unemployment benefits, I only owed about $1,200 in federal taxes after the standard deduction. It wasn't as bad as I expected.

dont forget that if you had other deductions like student loan interest or contributed to an IRA, those can help reduce your taxable income too

I used TurboTax last year and it walked me through everything step by step, including the unemployment income. Made it pretty straightforward even though I was worried about messing it up.

Just to close the loop on the Washington ESD contact issue - I tried Claimyr after seeing it mentioned here and it actually worked great. Got through to resolve a question about my benefits history in about 20 minutes instead of spending days trying to call. Worth checking out if you're having trouble reaching them.

Bottom line: yes you pay federal taxes on unemployment, no you don't pay Washington state taxes on it, and yes you should have received a 1099-G showing the amount. File your taxes on time even if you can't pay immediately.

I went through this exact same situation two years ago. One thing that really helped me was setting aside about 20% of each unemployment payment for taxes - I know it's hard when money is tight, but it saved me from a huge shock at tax time. Also, if you're doing your own taxes, make sure to double-check that the 1099-G amount matches what you actually received. I had a discrepancy where they included a week that was later denied, and it took forever to get corrected. The tax software like TurboTax or FreeTaxUSA handles unemployment income pretty well and will walk you through it step by step.