Is unemployment taxable in Washington - confused about tax implications

Yes, unemployment benefits are taxable at the federal level regardless of which state you're in. Washington state doesn't have income tax so you don't owe state taxes on it, but you'll definitely need to report it on your federal return. Washington ESD should send you a 1099-G form in January showing how much you received.

Oh no, I wish someone had told me this earlier! Is there a way to have taxes taken out automatically?

Yes, you can request federal tax withholding when you file your weekly claims. Look for the tax withholding option in your eServices account.

I learned this the hard way last year. Unemployment is definitely taxable income federally. You can have 10% withheld automatically if you want, or just set aside about 10-15% of each payment for taxes. The 1099-G will show your total benefits received.

Wait, can you change the withholding after you've already been receiving benefits for months?

Yes, you can start or stop tax withholding anytime by updating your preferences in the Washington ESD system.

I've been trying to call Washington ESD for weeks to ask about tax withholding but can never get through. The phone system is impossible! Has anyone found a way to actually reach a real person there?

I had the same problem until I found Claimyr. It's a service that helps you get through to Washington ESD agents automatically. 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 does it actually work?

It basically calls Washington ESD for you and waits in the queue, then calls you back when they get an agent on the line. Saved me hours of frustration.

this is why the system is broken - they should automatically tell people about taxes when they sign up!! now i owe like $2000 that i dont have

You can set up a payment plan with the IRS if you can't pay it all at once. Don't ignore it though, that makes it worse.

Same boat here. Really wish Washington ESD made this clearer upfront.

The tax implications depend on your total income for the year. If unemployment is your only income and it's under the standard deduction amount, you might not owe anything. But you still need to file a return to get any withholding back.

I worked part of the year before getting laid off, so I'll definitely have to pay. Should I start withholding now even though it's almost the end of the year?

Yes, better to start now than owe more later. Even a few months of withholding helps.

I remember during COVID they had that special rule where some unemployment wasn't taxable, but that was just for 2020 I think. Regular state unemployment like Washington ESD pays has always been taxable federally.

Yeah that was the American Rescue Plan Act thing. Only applied to the first $10,200 of unemployment in 2020.

Right, and only if your income was under a certain amount. Doesn't apply anymore.

Here's what I wish I knew earlier: log into your Washington ESD eServices account, go to 'Unemployment Services' then 'Payment Information' and you can see all your payments and set up tax withholding there. Much easier than trying to call.

Thanks for this! I've been dreading trying to call them.

Just tried this and it worked! Set up 10% withholding for future payments.

Don't forget you might also qualify for earned income credit or other credits that could offset the tax on unemployment. Definitely worth talking to a tax preparer if your situation is complicated.

Good point. H&R Block and other places often have free tax prep for lower income folks.

I used Claimyr last month when I needed to talk to Washington ESD about my 1099-G from last year having the wrong amount. Got through in like 20 minutes instead of spending all day calling. Totally worth it for tax-related questions.

How much does that service cost?

It's way cheaper than the time I was wasting calling myself. Plus my time is worth something too.

Just want to confirm - Washington state unemployment benefits are definitely taxable for federal purposes. The good news is Washington doesn't have state income tax so you only have to worry about federal. Make sure to keep track of any job search expenses too, sometimes those are deductible.

What kind of job search expenses can you deduct?

Things like resume printing, mileage to interviews, career counseling. Check with a tax pro though, the rules changed a few years ago.

been getting unemployment for 8 months and just found out about taxes too. why dont they make this more obvious?? now i have to figure out how much i owe

IRS has a withholding calculator online that can help you figure out how much you might owe.

Same thing happened to me. Set aside whatever you can now, even if it's not the full amount.

The 1099-G you get from Washington ESD will show the total amount of benefits you received and any taxes that were withheld. Keep this form safe - you'll need it to file your taxes. Should arrive by the end of January.

Do they mail it or is it electronic?

Both usually. You can access it online through your eServices account and they also mail a paper copy.

I tried using that Claimyr service someone mentioned and it actually worked great. Finally got to talk to someone at Washington ESD about my tax withholding questions without spending my whole day on hold. Game changer honestly.

Did they answer all your tax questions or did you still need to talk to a tax person?

They helped with the Washington ESD side of things like setting up withholding and explaining the 1099-G. Still need a tax preparer for the filing part.