Washington ESD unemployment benefits - is this earned or unearned income for taxes?

Thank you! That makes sense when you explain it that way. So it goes in the unearned income section then.

wait really? i thought since you had to work to earn the right to get unemployment it would be earned income

Good to know, thanks for sharing that experience. I definitely don't want to have to amend my return later.

How much of a pain was it to amend? I think I might have made the same error last year but never got any notice from IRS

It wasn't too bad, just had to file Form 1040X and wait forever for them to process it. If you think you made an error you should probably fix it rather than wait for them to catch it.

interesting, never heard of that service before. did they charge you anything?

They do charge for the service but it was worth it to actually talk to someone at Washington ESD instead of being on hold for hours.

I might need to look into that if I have more questions about my unemployment documentation.

Yeah I remember they asked when I filed my claim if I wanted taxes withheld but I said no because I needed the full amount at the time. Probably should have had them withhold something.

same mistake i made, now i owe like $1200 in taxes because of unemployment benefits

That's a helpful distinction, thanks for explaining the reasoning behind the classification.

so if i'm getting both unemployment and some freelance work income, the freelance is earned and unemployment is unearned?

Exactly right. The freelance income is earned income since it's payment for current services, while unemployment remains unearned income.

Good point, I'll make sure to verify how my software is categorizing it before I submit.

which tax software are you using? turbotax got it right for me automatically

Perfect, getting confirmation from someone who does this professionally makes me feel confident about filing it correctly.

do you know if the $10,200 unemployment exclusion from 2021 is still available for 2024 taxes?

No, that was only for tax year 2020. All unemployment income is fully taxable for 2024.

Right? It does feel counterintuitive but I guess the logic makes sense from the IRS perspective.

That's probably the clearest explanation I've seen, thanks for breaking it down that way.

social insurance program - never thought of unemployment that way but it makes total sense

Several people have mentioned that service now, might be worth checking out if I run into issues.

how long did it take them to connect you to someone?

They called me back within about an hour and had me connected to a Washington ESD agent pretty quickly after that.

Good point about reporting the full gross amount, I'll make sure to double check that.

what if washington esd made an error on the 1099-g form?

If there's an error on the 1099-G you need to contact Washington ESD to get a corrected form issued before filing your taxes.

Interesting, I did work part of the year before getting laid off so I'll look into that.

yeah the EITC can be really helpful, definitely worth checking if you qualify

That's a simple way to remember it - unemployment goes with investment income type stuff, not work income.

Good catch, I'll watch out for that when I'm going through the software.

wait unemployment isn't subject to self employment tax? i think my tax guy might have messed up last year

Correct, unemployment benefits are not subject to self-employment tax. You might want to double check your return from last year.

Thanks for the reassurance, sounds like it's pretty straightforward once you know the right category.

That's the third recommendation for that service, definitely seems like it might be worth trying if I need to contact Washington ESD.

do they work with other state unemployment agencies or just washington?

I think they work with multiple states but I only used them for Washington ESD issues.

Perfect summary, thanks everyone for all the helpful responses. I feel confident about filing this correctly now.

glad you got it figured out! tax season is stressful enough without worrying about categorizing things wrong

Good advice, I'll make sure to save copies of everything in case I need them later.

Fortunately I only dealt with Washington ESD but that's good info for anyone who might have moved between states.

yeah i had to deal with two different states when i moved, it was a nightmare but the tax treatment was the same for both

Thanks for confirming that - it's reassuring to hear from people with experience handling this.