Washington ESD unemployment benefits - how much is taxed federally?

That's actually not as bad as I thought it would be. I was imagining some crazy high rate. How do I set up the withholding in my account?

Log into your SecureAccess Washington account, go to your claim details, and look for tax withholding options. You can start or stop it anytime.

Ouch that's rough. Did you not have any other income that year?

I worked part of the year then got laid off. The combo of work income plus UI benefits pushed me into a higher bracket than expected.

How much does something like that cost? I'm already tight on money from being unemployed.

It's worth checking out their site for current info. For me it was worth it just to avoid the endless busy signals and getting hung up on.

That actually sounds really helpful. I've been trying to call Washington ESD for weeks about a different issue.

Wait so if I move to another state while collecting do I have to pay that state's taxes?

That gets complicated. Generally you pay taxes where you're a resident when you receive the income, not where the benefits originated.

That's probably the smart move. Better to get a small refund than owe a big chunk.

Agreed. I learned this lesson the hard way with freelance work years ago.

I worked the first 4 months of the year before getting laid off, so I'll definitely have combined income to worry about.

In that case definitely start withholding or setting money aside NOW. Don't wait until January to figure this out.

Can you actually request more than 10% withholding from Washington ESD?

I don't think Washington ESD offers more than 10% withholding, but you can set aside extra yourself. I just had 10% withheld and saved another 5% in a separate account.

Smart approach. Treating it like forced savings for tax time.

That's exactly what happened to my brother. He thought he'd pay 12% on everything but the UI benefits pushed his total income into the next bracket.

This is getting complicated. Maybe I should talk to a tax person about this.

Except most people have taxes automatically withheld from their paychecks and don't think about it. With UI you have to actively choose.

true good point. most ppl never had to think about withholding before getting laid off

Did they ask for a lot of personal information to use the service?

Not really, it was pretty straightforward. Just helped me get through the phone system basically.

I might try this. I've been trying to call about my adjudication status for weeks with no luck.

Good point! I hadn't thought about that. So I need to calculate taxes on the 8 weeks I've already received.

Exactly. Whatever your weekly benefit amount times 8 weeks, figure out what taxes would be on that amount.

That sounds more complicated than just having Washington ESD withhold it. I think I'll stick with the automatic route.

Yeah the withholding is way easier. Set it and forget it.

Wait really? They can penalize you for not paying taxes on money you didn't know you'd owe taxes on?

Unfortunately yes, but there are safe harbor rules. If you paid at least 90% of this year's tax or 100% of last year's tax through withholding/estimates, you usually avoid penalties.

Hindsight is 20/20 though. When you're desperate to get any income coming in, tax planning isn't exactly top priority.

Exactly. I was just focused on getting approved and getting money to pay bills. Taxes were the last thing on my mind.

Good reminder. And don't forget you have to report that side income to Washington ESD too when you file your weekly claims.

I'm not doing any side work right now but good to know for the future. This whole unemployment thing has so many rules to keep track of.