How to pay taxes on Washington ESD unemployment benefits - need help with forms

Ugh I was afraid of that. Do you know roughly what percentage I should expect to owe?

Depends on your total income and tax bracket but could be 10-22% of the unemployment amount. You might want to talk to a tax preparer.

Ouch that's exactly what I'm afraid of. Did you have to pay penalties too?

No penalties since it was my first time owing that much. But I had to set up a payment plan with the IRS.

Wait you can have taxes withheld from unemployment? I never saw that option when I was filing my claims.

Thanks! I wish I had known that earlier. Does Washington ESD send any kind of notice about this?

Not really, they mention it briefly in the handbook but it's easy to miss. Most people don't realize unemployment is taxable until they get their 1099-G.

Did they help with the actual tax filing or just explain the Washington ESD side of things?

Just the Washington ESD stuff - like confirming the amounts on my 1099-G were correct. For the actual tax return I still had to go to H&R Block.

Never heard of Claimyr before but getting through to Washington ESD is always a nightmare. Might be worth checking out.

Good point about quarterly payments. How do I figure out how much to pay?

IRS has worksheets for estimated taxes or you can use their online calculator. Generally you want to pay 100% of last year's tax liability spread over 4 quarters.

I agree they should make it more obvious, but the tax withholding option is there if you know to look for it.

yeah but who thinks to look for it when youre just trying to file your weekly claim and get some money to survive

Exactly my situation. I was just focused on getting through each week, not thinking about taxes.

You can log into your Washington ESD account and check your payment history. That should show all the payments you received. If there's a discrepancy you'll need to contact them.

I tried logging in but my account seems to be locked. Is there another way to check?

This is exactly the kind of thing Claimyr helped me with. They can get you connected to someone who can unlock your account and verify your payment amounts.

Wait, so if you pay back overpayments that reduces your taxable unemployment income?

Yes, you only pay taxes on the net amount you actually kept. But you need documentation of the repayment for your tax preparer.

That's correct. The 1099-G shows gross payments but you can deduct any repayments you made in the same tax year.

Can you change the withholding election after you've already been filing claims for a while?

Yes, you can change it on any weekly claim filing. It only applies to future payments though, not retroactive.

Good to know there are options. How long do they typically give you to pay?

Depends on how much you owe but they can work with you. I think short-term is up to 120 days and long-term can be several years.

Yeah I mentioned earlier I'm on a payment plan. They were actually pretty reasonable to work with once I called them.

Thankfully I only dealt with Washington ESD. That sounds like it would make things even more complicated.

Yeah it was a mess. Had to make sure I didn't double-count anything on my federal return.

That's a great tip. Do you know how to find these free services?

irs website has a locator tool for free tax prep. also check with local libraries and community colleges

I didn't know job search expenses were deductible. What kind of things qualify?

Actually I need to correct myself - the tax law changes in recent years eliminated most of those deductions. Better to check with a current tax guide or preparer.

Yeah the job search expense deduction was eliminated for most people in 2018. Now it's mainly just the standard deduction or itemized deductions like mortgage interest and charitable donations.

Yikes that sounds like a nightmare to sort out.

It was. Took months to get it straightened out. Always double-check the SSN before you file your taxes.

How much do tax preparers typically charge for a situation like this?

Varies a lot but maybe $200-400 depending on complexity. Could be worth it if you owe thousands in taxes.

I used FreeTaxUSA online and it was like $15 for the state return. Federal was free. Might be worth trying before paying for a preparer.

Thanks for sharing your experience. $150/month doesn't sound too bad for that amount.

Yeah and there's no penalty as long as you stick to the payment plan. Just a small amount of interest.

Absolutely. I'm not on unemployment anymore but I'll definitely remember this if I ever need benefits again.

Same here. The 10% withholding option is there for a reason. Use it.

Agreed. It's like having taxes withheld from a regular paycheck. Just makes sense.