Does Washington ESD unemployment benefits count as taxable income?
I've been collecting unemployment benefits for about 8 weeks now and just realized I should probably be thinking about taxes. Does Washington ESD unemployment tax these benefits? I know some states don't tax unemployment but I'm not sure about Washington. Should I be setting money aside or having taxes withheld? My weekly benefit amount is $647 and I don't want to get hit with a huge tax bill next year.
49 comments
Join the conversation
GalacticGladiator
Washington state doesn't have a state income tax, so you won't owe Washington ESD any state taxes on your unemployment benefits. However, unemployment benefits are still considered taxable income at the federal level. You'll need to pay federal taxes on whatever you receive.
0 coins
Freya Larsen
AuthorThat'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?
0 coins
GalacticGladiator
Yes, you can request federal tax withholding through your Washington ESD account. I believe it's 10% if you choose to have it withheld.
0 coins
Omar Zaki
You should definitely set up tax withholding if you can afford the reduction in your weekly payments. I made the mistake of not doing this last year and ended up owing about $2,800 in federal taxes on my unemployment benefits. It was not fun come tax time.
0 coins
Chloe Taylor
Ouch, that's a big hit! How much were you getting per week if you don't mind me asking?
0 coins
Omar Zaki
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.
0 coins
Freya Larsen
AuthorThat's exactly what I'm trying to avoid! I'm definitely going to set up the withholding.
0 coins
Diego Flores
I had trouble getting through to Washington ESD to set up tax withholding on my account. Kept getting the busy signal or getting disconnected after waiting forever. Finally used a service called Claimyr (claimyr.com) that helped me get through to an actual agent. They have a video demo showing how it works: https://youtu.be/7DieNd3C7zQ. Made the whole process so much easier.
0 coins
Anastasia Ivanova
Never heard of that service before. Did it actually work for getting through to Washington ESD?
0 coins
Diego Flores
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.
0 coins
Freya Larsen
AuthorThat sounds really helpful. I might try that if I can't get through on my own.
0 coins
Sean Murphy
wait so unemployment benefits are taxed?? I thought they were like welfare or something and didn't count as income. This is news to me.
0 coins
GalacticGladiator
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.
0 coins
Sean Murphy
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.
0 coins
StarStrider
The tax withholding option is really convenient. I set mine up when I first filed my claim and it's been automatic ever since. Better to have it withheld and maybe get a small refund than to owe a bunch of money.
0 coins
Freya Larsen
AuthorThat's smart thinking ahead like that. I wish I had thought about it when I first filed.
0 coins
Zara Malik
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.
0 coins
StarStrider
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.
0 coins
Luca Marino
I tried to set up tax withholding through the website but kept getting error messages. Anyone else have this problem? The page would just freeze when I tried to submit the change.
0 coins
GalacticGladiator
Try clearing your browser cache and cookies, then log back in. Sometimes the Washington ESD website gets glitchy with saved data.
0 coins
Luca Marino
I'll give that a try. Thanks for the suggestion!
0 coins
Diego Flores
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.
0 coins
Nia Davis
Just a heads up - if you're married and filing jointly, your unemployment benefits combined with your spouse's income might push you into a higher tax bracket. Something to consider when deciding whether to have taxes withheld.
0 coins
Freya Larsen
AuthorI'm single so that shouldn't be an issue for me, but that's good to know for other people.
0 coins
Mateo Perez
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.
0 coins
Aisha Rahman
The 10% federal withholding might not be enough depending on your total income and tax situation. I had 10% withheld but still owed a little bit extra at tax time. Better than nothing though!
0 coins
Freya Larsen
AuthorGood point. I might set aside a little extra just to be safe.
0 coins
GalacticGladiator
That's always wise. Better to overpay slightly and get a refund than to underpay and owe money with potential penalties.
0 coins
CosmicCrusader
Does anyone know if the tax withholding applies to back payments too? I had some weeks that were held up in adjudication and just got paid for them. Want to make sure taxes are being withheld from those as well.
0 coins
GalacticGladiator
Yes, if you have tax withholding set up, it should apply to all payments including back payments from adjudication delays.
0 coins
CosmicCrusader
Perfect, thanks for confirming that!
0 coins
Ethan Brown
I'm self-employed and had to file for unemployment during a slow period. Do I need to worry about quarterly estimated tax payments since unemployment benefits are taxable income?
0 coins
GalacticGladiator
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.
0 coins
Ethan Brown
Yeah, I think I'll need to talk to my accountant about this. Thanks!
0 coins
Yuki Yamamoto
Another thing to keep in mind - if you received unemployment benefits in 2021, there was a special tax break where the first $10,200 was tax-free federally. But that was just for 2021 tax year. No such break for other years.
0 coins
Freya Larsen
AuthorI remember hearing about that but wasn't sure if it was still a thing. Good to know it was just for 2021.
0 coins
Carmen Ortiz
That 2021 tax break saved me a ton of money. Wish they would bring it back!
0 coins
Andre Rousseau
Can you change your tax withholding election after you've already made the choice? Like if I start with no withholding but then change my mind?
0 coins
GalacticGladiator
Yes, you can change your tax withholding preference anytime through your Washington ESD account or by calling them.
0 coins
Andre Rousseau
Good to know it's not a permanent decision. Thanks!
0 coins
Zoe Papadakis
I called Washington ESD yesterday to set up tax withholding and the agent was super helpful. Only had to wait about 15 minutes which was way better than usual. Maybe try calling around 2 PM - seems like a good time to get through.
0 coins
Freya Larsen
AuthorThat's great timing info! I'll try calling around that time tomorrow.
0 coins
Jamal Carter
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.
0 coins
AstroAdventurer
Just wanted to follow up and say I successfully set up federal tax withholding on my Washington ESD account online. The process was pretty straightforward once I found the right section. Look under 'Payment Information' in your account dashboard.
0 coins
Freya Larsen
AuthorAwesome, thanks for the update! I'll look for that section when I log in.
0 coins
Mei Liu
Thank you for posting the exact location! I've been looking all over for where to set this up.
0 coins
Liam O'Sullivan
One more thing to consider - if you're planning to return to work soon and will only be on unemployment for a short time, you might not need to worry as much about withholding. But if you're looking at being on benefits for several months like I am, definitely set up that tax withholding.
0 coins
Freya Larsen
AuthorI'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.
0 coins
Amara Chukwu
Better safe than sorry with taxes. I learned that lesson the hard way a few years ago with a different situation.
0 coins