How does unemployment tax work with Washington ESD benefits?

I did get the 1099-G form but I wasn't sure what to do with it. So I need to report that $8,200 as income?

Exactly. Enter it as unemployment compensation on your tax return. The form should show the exact amount to report.

Same thing happened to me! I ended up owing like $1,400 because I spent all my unemployment money on bills and didn't save anything for taxes.

This is why it's important to either have taxes withheld or set aside about 10-12% of each payment for taxes. Washington ESD does give you the option to withhold 10% for federal taxes when you file your weekly claims.

Really? I had no idea you could change it after starting. Is it too late if my claim already ended?

If your claim already ended, you can't change withholding for benefits you already received. But keep it in mind if you ever need to file for unemployment again.

I actually found this service called Claimyr that helps you get through to Washington ESD agents. They handle the calling for you and connect you when an agent is available. Check out claimyr.com - they have a video demo at https://youtu.be/7DieNd3C7zQ that shows how it works.

That sounds too good to be true. How much does it cost?

I used it last month when I had an adjudication issue. It was worth it just to avoid spending hours on hold. They basically do all the waiting for you.

You'll owe taxes on whatever unemployment benefits you actually received, regardless of any part-time work. Your 1099-G will show the correct amount. Plus you'll also owe taxes on your part-time wages from your W-2.

This is getting complicated. I think I need to talk to a tax preparer.

You're thinking of the American Rescue Plan Act which made the first $10,200 of unemployment benefits tax-free for 2020 only. That special provision doesn't apply to 2024 benefits - they're fully taxable again.

Ugh, of course. Thanks for clarifying. Guess I better start saving for next year's tax bill.

Thanks! I'll remember that if I ever need to file for unemployment again. Wish I had known this earlier.

yeah i'm definitely doing this if i ever have to file again. getting hit with that tax bill was brutal

Definitely try Claimyr for getting through to Washington ESD. I mentioned it earlier but it really does work. Much better than spending all day redialing their main number.

I used Claimyr too when I had an overpayment notice issue. Got connected to an agent within an hour instead of calling for days.

I'll check it out. At this point I'm willing to try anything to get this resolved before I file my taxes.

Smart approach. I wish Washington ESD made this more clear upfront instead of making it an optional thing you might miss.

Do they tell you about the withholding option when you first apply? I don't remember seeing it.

It's usually mentioned during the application process, but it's easy to miss if you're focused on just getting your claim approved. They should make it more prominent.

That's good to know! So I only need to worry about federal taxes on the unemployment income.

Yep, that's one advantage of living in Washington. No state income tax means unemployment benefits are only subject to federal taxation.

Honestly, if you just have regular unemployment benefits and maybe some W-2 income, most tax software can handle it easily. The 1099-G gets entered just like any other income form.

Good point. I might try TurboTax or something similar first before paying for a preparer.

The IRS gets a copy of your 1099-G too, so they know exactly how much unemployment you received. Not reporting it will definitely trigger an audit or at minimum a notice demanding payment with penalties and interest.

Yeah don't try to hide it. The government already knows about every dollar of unemployment benefits you received. Just bite the bullet and pay the taxes.

Good to know. I'll make sure to tell my 'friend' that hiding it isn't worth the risk.

Since Washington doesn't have state income tax, you'd only need to file in Oregon if you became a resident there and had other income. The unemployment from Washington ESD goes on your federal return regardless of where you live now.

That makes sense. Thanks for explaining it clearly.

How long did it take them to connect you? I'm dealing with the same problem.

About 45 minutes from when I submitted my request to when they called me back with the agent on the line. Much faster than trying to call myself.

Same here! This thread has been super helpful. Wish I had known all this when I first started receiving benefits.

Glad this helped! Tax season is stressful enough without surprises about unemployment benefits being taxable.