Should I have Washington ESD withhold taxes when filing for unemployment benefits?

Definitely have them withhold taxes! Unemployment benefits are fully taxable as income and you'll owe both federal and state taxes on them. Washington ESD will withhold 10% federal if you request it. Trust me, you don't want to get surprised with a big tax bill next April.

I didn't have taxes withheld when I was on unemployment last year and ended up owing about $1,800 in federal taxes. It was a nightmare trying to come up with that money. Definitely recommend having them take it out automatically.

I had the opposite experience - I had taxes withheld and ended up getting a refund because my total income for the year was lower than usual. It really depends on your overall tax situation. If you're in a lower tax bracket this year due to unemployment, the 10% withholding might be too much.

Just a heads up - if you're having trouble getting through to Washington ESD to set up your withholding preferences, I found this service called Claimyr that helps you actually reach a live agent. They have a website at claimyr.com and there's a demo video at https://youtu.be/7DieNd3C7zQ that shows how it works. Saved me hours of trying to call.

honestly i never withhold taxes cuz i need every penny i can get. ill deal with the tax bill later when i hopefully have a job again. probably not the smartest move but thats just how it is sometimes

The math is pretty simple - if you receive $500 per week in benefits and have 10% withheld, that's $50 per week going to taxes. Over 26 weeks that's $1,300 in withholding. Without withholding, you'd owe roughly that same amount (maybe a bit more or less depending on your other income) when you file your tax return.

I'm confused about this whole thing. When I filed my claim last month, I don't remember seeing any option about taxes. Did I miss something? My benefits started but I have no idea if taxes are being withheld or not.

Pro tip: you can also make quarterly estimated tax payments to the IRS if you don't have taxes withheld from your unemployment benefits. This way you're not hit with a big bill at tax time and you avoid any potential underpayment penalties.

Whatever you decide, make sure to keep track of all your unemployment income for tax purposes. Washington ESD will send you a 1099-G form at the end of the year showing how much you received in benefits.

I was in a similar situation last year and decided to have taxes withheld. It was the right choice for me. Even though my weekly payment was smaller, I didn't have to worry about setting aside money for taxes or dealing with a big bill later. Peace of mind was worth it.

Just remember that if you find a job quickly and don't collect unemployment for very long, you might get a refund on those withheld taxes when you file your return. It's not money lost forever.

I used Claimyr twice when I had issues with my claim and tax withholding settings. First time was to get my withholding turned on after I realized I forgot to select it, second time was to clarify something about my 1099-G form. Both times they got me through to an actual Washington ESD agent within a few hours instead of me spending days trying to call.

Another thing to consider - if you have a spouse who's still working, having taxes withheld from unemployment might put you in a better position overall. Your combined income could push you into a higher tax bracket.

The Washington ESD website has a section about taxes on unemployment benefits if you want to read more details. It's under the 'Resources' section I think.

i think washington esd automatically withholds taxes unless you opt out? or is it the other way around? i cant remember what the default setting is

Bottom line: if you can afford to have the taxes withheld, do it. If you absolutely need every dollar to survive, don't withhold but start setting aside money for taxes as soon as you can. Don't just ignore it and hope it goes away.

One last thing - if you're collecting unemployment in January, you might want to consider having taxes withheld just for the new tax year even if you didn't the previous year. Fresh start and all that.

Thanks everyone for all the advice! This thread has been super helpful. I'm going to select the tax withholding option when I file my claim tomorrow. Better to be safe than sorry, and I'd rather have a smaller weekly payment than a big tax surprise next year.