Does Washington ESD unemployment benefits count as taxable income?

That's a relief about the state taxes! So I just need to worry about federal then. Do you know if I can have them withhold federal taxes from my weekly payments?

Yes, you can request federal tax withholding through your Washington ESD account. I believe it's 10% if you choose to have it withheld.

Ouch, that's a big hit! How much were you getting per week if you don't mind me asking?

I was getting the maximum weekly benefit which was around $844 at the time. Collected for about 20 weeks total. Should have definitely had the 10% withheld.

That's exactly what I'm trying to avoid! I'm definitely going to set up the withholding.

Never heard of that service before. Did it actually work for getting through to Washington ESD?

Yeah it worked great! Got connected to an agent within like 20 minutes instead of spending hours trying to call myself. They helped me set up the tax withholding and answered some other questions I had about my claim.

That sounds really helpful. I might try that if I can't get through on my own.

Unemployment benefits are definitely taxable income federally. You'll get a 1099-G form from Washington ESD showing how much you received during the tax year.

well crap... I've been on unemployment for 6 months and haven't been saving anything for taxes. This is going to be a problem.

That's smart thinking ahead like that. I wish I had thought about it when I first filed.

How do you set it up when you first file? I'm about to file a new claim and want to make sure I do this right.

There should be an option during the application process, but you can also log into your Washington ESD account later and change your tax withholding preferences.

Try clearing your browser cache and cookies, then log back in. Sometimes the Washington ESD website gets glitchy with saved data.

I'll give that a try. Thanks for the suggestion!

If that doesn't work, you might want to try calling or using that Claimyr service I mentioned earlier. Sometimes it's easier to just talk to someone.

I'm single so that shouldn't be an issue for me, but that's good to know for other people.

That's exactly what happened to us last year. My husband's income plus my unemployment benefits put us in a higher bracket and we ended up owing more than expected.

Good point. I might set aside a little extra just to be safe.

That's always wise. Better to overpay slightly and get a refund than to underpay and owe money with potential penalties.

Yes, if you have tax withholding set up, it should apply to all payments including back payments from adjudication delays.

Perfect, thanks for confirming that!

That's a great question and probably something you should discuss with a tax professional. Self-employment tax situations can get complicated with unemployment benefits added to the mix.

Yeah, I think I'll need to talk to my accountant about this. Thanks!

I remember hearing about that but wasn't sure if it was still a thing. Good to know it was just for 2021.

That 2021 tax break saved me a ton of money. Wish they would bring it back!

Yes, you can change your tax withholding preference anytime through your Washington ESD account or by calling them.

Good to know it's not a permanent decision. Thanks!

That's great timing info! I'll try calling around that time tomorrow.

Lucky you! I've been trying to call for weeks and can never get through. Maybe I'll try that Claimyr thing someone mentioned earlier.

Awesome, thanks for the update! I'll look for that section when I log in.

Thank you for posting the exact location! I've been looking all over for where to set this up.

I'm honestly not sure how long I'll be on benefits. Job market is pretty tough right now so I think I'll set up the withholding just to be safe.

Better safe than sorry with taxes. I learned that lesson the hard way a few years ago with a different situation.