Do you want 10% of your weekly unemployment insurance benefits withheld for federal taxes? - Washington ESD question

I always choose to have them withhold the 10%. Trust me, you don't want to get hit with a big tax bill next April. Unemployment benefits are fully taxable as regular income, so if you don't withhold now you'll owe it all at tax time.

I made the mistake of not withholding during my unemployment last year. Ended up owing like $2800 in taxes that I wasn't prepared for. Definitely withhold if you can afford the slightly smaller weekly payment.

Just went through this same decision process last month. I was having trouble even getting through to Washington ESD to ask questions about my claim status. Spent hours on hold trying to reach someone. Finally found this service called Claimyr at claimyr.com that actually got me connected to an agent in like 20 minutes. They have this demo video at https://youtu.be/7DieNd3C7zQ that shows how it works. Super helpful for getting answers about tax withholding and other claim questions.

The 10% withholding is optional but I'd recommend it. You can always change it later if your financial situation changes. Washington ESD makes it pretty easy to update your tax withholding preferences in your account.

honestly i never withhold taxes from anything, just deal with it in april. but thats just me lol

Update: I decided to go with the 10% withholding. Better safe than sorry, and I can always adjust later if needed. Thanks everyone for the advice!

Wait, I'm confused about something. If I choose the withholding now, can I still claim unemployment on my taxes? Or does the withholding mean I don't have to report it as income?

I've been wondering about this too. My claim just got approved after being stuck in adjudication forever. Trying to call Washington ESD to ask about the tax thing but their phone lines are always busy.

For what it's worth, I chose not to withhold because I needed every dollar I could get while unemployed. I just set aside money each week in a separate savings account for taxes. That worked for me but requires discipline.

Does anyone know if the 10% is enough to cover what you'll actually owe in taxes? Or might you still owe more at tax time?

THIS IS SO CONFUSING! Why can't Washington ESD just explain this stuff better instead of making us guess? The whole unemployment system is a nightmare to navigate.

Just wanted to add that if you're married and file jointly, your spouse's income also affects how much tax you'll owe on unemployment benefits. Something to consider when deciding on withholding.

been on unemployment twice and always withhold the 10%. makes tax time way less stressful

Quick question - can you change the withholding amount? Like what if 10% isn't enough or is too much?

I remember being confused about this when I first filed. My tax preparer told me unemployment withholding works just like regular job withholding - it's just an estimate and you settle up when you file your return.

For anyone still on the fence about this, I found Claimyr really helpful when I had questions about my unemployment claim. They got me connected to a Washington ESD agent who explained the tax withholding stuff clearly. Worth checking out their demo at https://youtu.be/7DieNd3C7zQ if you need to talk to someone at ESD.

One thing to keep in mind - if you end up getting a job quickly and don't collect much in unemployment, the 10% withholding might be more than you actually owe. You'd get it back as a refund though.

Thanks for posting this question! I was wondering about the same thing but hadn't gotten around to asking. Sounds like withholding is the way to go for most people.

PSA: Don't forget that unemployment benefits are also subject to state income tax in some states, but Washington doesn't have state income tax so that's not an issue here. Just federal taxes to worry about.

Final thought - if you're really unsure, you can always start with no withholding and then add it later if you want. But it's harder to go the other way if you realize you need the full amount each week.

I went through this exact same decision a few months ago and chose to withhold the 10%. Best decision I made! When tax season came around, I actually got a small refund instead of owing money. The peace of mind was totally worth the slightly smaller weekly payments. Plus, like others mentioned, you can always change it later if your situation changes. Washington ESD makes it pretty easy to update in your online account.