Tax confusion: ESD back payments from 2025 showing on 2026 1099G - which year do I file them?

The general tax rule is that income is reported in the year it was received, not when it was earned. Since you physically received the benefits in 2026, and that's what the 1099G reflects, you would report this on your 2026 tax return. The IRS follows what's called a 'cash basis' for most individual taxpayers, meaning you report income when you actually receive it. I had a similar situation with back unemployment payments from an appeal, and my accountant advised that I follow what the 1099G stated rather than trying to amend the previous year's taxes. The ESD reports to the IRS based on when they distributed the funds, not when you were eligible for them.

WRONG!! You absolutely SHOULD amend your 2025 taxes! The money was for 2025 unemployment periods so it should be taxed in 2025! ESD made a mistake on your 1099G. Call them and demand they fix it. I had this EXACT same problem and after 6 calls they finally fixed my 1099G to show the correct year. Don't let the government screw you over twice!!!

I went through this exact situation in 2024/2025. Here's what my CPA told me: For federal tax purposes, you report unemployment income in the year you received it, which matches your 1099G. So for you, that's 2026. HOWEVER - if this income bumps you into a higher tax bracket or affects your eligibility for certain credits/deductions, you might qualify for something called "income averaging" on your 2026 return. It's complicated, but essentially allows you to spread the income impact across years. I'd strongly recommend consulting with a tax professional who understands unemployment and back payments. There might be strategies to minimize the tax impact that aren't obvious.

im in the EXACT same boat got denied last summer then finally won appeal in january and got my money in feb lol. my tax guy said it counts for 2026 taxes cuz thats when i got paid. sucks but watcha gonna do

Has anyone been able to actually reach ESD to ask about this directly? I've been trying to get through to them about a different 1099G issue for three weeks with no luck. Always just get the 'high call volume' message and then disconnected. By the way, I found an awesome service called Claimyr that can actually get you through to an ESD agent without the endless waiting. Used it yesterday and talked to a real person in 25 minutes instead of fighting busy signals all day. Their website is claimyr.com and they have a video that shows how it works: https://youtu.be/7DieNd3C7zQ?si=26TzE_zGms-DODN3. Might be worth trying if you need to get this sorted directly with ESD.

I had this same issue last year and tried to amend my previous year's taxes. The IRS rejected my amendment and said the benefits must be reported in the year received (when the money actually hit my account), regardless of which period the benefits were for. So in your case, you need to report on your 2026 taxes since that's when you got the money and what your 1099G says. This is frustrating but fighting it just causes more headaches. The ESD system and the tax system don't talk to each other in a logical way when it comes to appeals and back payments.

Just to add another point of clarification - unemployment benefits are typically taxable income for federal purposes, but Washington state doesn't have state income tax, so you only need to worry about how this affects your federal return. If you're concerned about tax brackets, remember that the US has a progressive tax system. If the additional $6,800 pushes some of your income into a higher bracket, only the amount above the threshold gets taxed at the higher rate - not all of your income. You might want to look at running some tax calculations or using a tax estimation tool to see the actual impact.

just wondering did anyone elses back unemployment payments get taxed at a weird rate? when i got mine last year it seemed like they withheld way more than 10% for taxes, more like 25% or something?? confused about that too

Thanks everyone for all the helpful responses! Based on what I'm hearing, it sounds like I need to include this on my 2026 taxes rather than trying to amend 2025. I think I'll consult with a tax professional just to be safe, especially regarding potential impacts on credits and deductions. This unemployment appeal process has been so much more complicated than I expected!