Is Washington ESD unemployment taxable - confused about tax implications

I haven't gotten any 1099-G form yet. When do they usually send those out?

They're required to send them by January 31st. You can also access it online through your SecureAccess Washington account if you need it sooner.

Wait, you can have them withhold taxes automatically? I wish I had known this months ago! How do you set that up?

yeah when you file your weekly claim theres an option to request federal tax withholding. its like 10% i think

How much did you end up owing if you don't mind me asking? I'm trying to figure out if I should panic or not.

I received about $15,000 in benefits and owed around $3,200 in federal taxes. It varies based on your total income and tax bracket though.

Never heard of Claimyr before. Is it legit? I've been trying to call Washington ESD for weeks about my withholding.

I mean, unemployment is income replacement so it makes sense it's taxed like income. But I agree the phone system is awful.

Income replacement that's half what you made before! And then they tax it at full rates. Complete scam.

Is there a way to change withholding for benefits already received, or is it only for future payments?

You can only change withholding for future payments. Past benefits without withholding will need to be handled through estimated payments or when you file your return.

You can use the IRS withholding calculator online. Generally, unemployment is taxed at your marginal tax rate - so if you're in the 22% bracket, expect to owe about 22% of your benefits in federal taxes.

Don't forget about potential penalties for underpayment if you owe more than $1,000. You might want to make a quarterly estimated payment.

Oh no, that's exactly what I'm afraid of. Did you know you could have taxes withheld when you were filing weekly?

nope had no idea. wish someone had told me that 6 months ago

Thanks for the tip! The regular phone system has been impossible. How much does Claimyr cost?

They focus on getting you connected efficiently rather than pricing. Worth checking out their site at claimyr.com if you need to reach Washington ESD quickly.

What if I can't afford to pay the taxes I owe all at once? Are there payment plan options?

Yes, the IRS offers payment plans for people who can't pay their full tax liability immediately. There are fees involved but it's better than ignoring the debt.

This is super helpful! About the quarterly penalties - how much are we talking about typically?

Penalties vary but can be 3-8% annually on the underpaid amount. If you owe less than $1,000 total or paid 90% of current year liability, you usually avoid penalties.

That's a good point. The benefits are still from Washington ESD so Washington rules apply, but you'd file taxes as an Oregon resident if that's where you lived on Dec 31st.

Exactly! Oregon has state income tax too so I had to pay state taxes on the Washington unemployment benefits.

Unemployment benefits are considered income replacement by the tax code. The theory is that it's replacing wages you would have earned, so it's taxed like wages.

I agree it feels unfair but that's how the law works. At least there's no Social Security or Medicare tax on unemployment benefits.

Did they help you set up withholding for benefits you already received, or just future ones?

Just future payments. Past benefits are already paid out without withholding so you have to handle those taxes yourself.

How do you set up the automatic withholding? Is it something you do once or every time you file weekly?

you can set it as a preference in your account but i think you still have to confirm it each week when filing claims. better safe than sorry

What do you do if the 1099-G amount is wrong? Do you have to get it corrected before filing taxes?

Yes, you should get it corrected. Contact Washington ESD to request a corrected 1099-G. Don't file your taxes with incorrect information.

Good point. Any special unemployment programs like extended benefits or additional payments are generally taxable as well.

That's actually really smart. I wish I had thought of that from the beginning. 25% seems like a safe buffer.

25% is probably high unless you're in a high tax bracket, but better safe than sorry. Most people would be fine with 15-20%.

Thanks everyone for all the advice. This thread has been incredibly helpful. Going to try to get my withholding set up for future payments.

Glad this helped! Taxes are confusing enough without having to figure out unemployment implications on your own.