Is unemployment earned income for Washington ESD benefits and taxes?

Thank you! That makes sense. So for things like food stamps or housing assistance, unemployment wouldn't count as earned income then?

Correct, it would count as unearned income for those programs. Different programs have different rules about how they treat unearned vs earned income.

Wait, so we can't get EITC while on unemployment? That's really going to hurt at tax time.

Unfortunately no, EITC is specifically for earned income. But you can still get other tax credits depending on your situation.

How does that work exactly? I've been trying to call Washington ESD for weeks about other questions.

They basically handle the calling and waiting for you, then connect you when an agent is available. Saved me hours of frustration.

Do we have to pay taxes on unemployment right away or can we wait until we file our return?

You can choose to have taxes withheld from your weekly benefits or pay when you file. Washington ESD lets you set up tax withholding in your account.

For Medicaid, unemployment does count as income, but it's still unearned income, not earned income. The distinction matters for some programs but not others.

ok so it counts as income but not earned income got it thanks

Exactly right. The key distinction is earned vs unearned income, not whether something is taxable or not.

Yep, you've got it. Washington ESD benefits = unearned taxable income.

Oh wow, I didn't even think about that scenario. So you'd have both earned and unearned income at the same time.

Yeah exactly, makes tax filing interesting. The part-time wages are earned income, the unemployment is unearned income.

WIC looks at total household income, not specifically earned vs unearned. Your unemployment benefits would count toward your income limits for WIC.

Thanks, that's helpful to know.

That's why I mentioned Claimyr earlier - sometimes you just need to talk to an actual person to get straight answers instead of trying to figure everything out from websites.

Yeah I might have to try that, the automated system is useless for complex questions like this.

Good point, that's important for people getting Social Security disability benefits too.

Exactly, SSDI recipients need to know this distinction when reporting income.

That's actually a really simple way to think about it. Thanks for sharing that.

Yeah that makes it easy to remember the difference.

Wow, didn't know that. So if unemployment is your only income for the year, no IRA contributions?

Correct, you need earned income to contribute to traditional or Roth IRAs.

Their website is pretty terrible for explaining the details. Most of the useful info I've gotten has been from forums like this.

That's another reason why being able to actually talk to an agent through Claimyr was so helpful for me. Some questions just need a human explanation.

Good reminder! I almost forgot that we still need to keep up with all the weekly claim requirements.

Exactly, the job search requirements and availability rules still apply regardless of how the income is classified.

Glad we could help! It's one of those things that seems confusing at first but makes sense once you understand the basic distinction.

Yeah this is exactly the kind of info that should be easier to find on the Washington ESD website.

That's a good point, the classification doesn't change based on your filing status.

Right, it's based on the source of the income, not your tax filing situation.

Perfect summary! Thanks to everyone who contributed to this discussion.

This thread should be pinned somewhere, really useful info that lots of people probably don't know.