Washington ESD unemployment benefits - is unemployment tax free or do I owe taxes?
I've been collecting unemployment through Washington ESD for about 6 months now and just realized I might need to pay taxes on these benefits. Is unemployment tax free or am I going to owe money when I file my taxes? I haven't been having any taxes withheld from my weekly claims because I thought unemployment was tax-free income. Should I be worried about owing a huge tax bill? Has anyone dealt with this before?
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Miles Hammonds
Unfortunately unemployment benefits are taxable income at the federal level. Washington state doesn't have income tax so you won't owe state taxes, but you'll definitely owe federal taxes on whatever you received from Washington ESD. You should have gotten a 1099-G form showing your total benefits.
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Isla Fischer
•Oh no, I never got a 1099-G form. How do I get that from Washington ESD?
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Miles Hammonds
•You can download it from your Washington ESD account online or they should have mailed it to you in January. Check your SecureAccess Washington account.
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Ruby Blake
yeah unemployment is definitely taxable, learned this the hard way last year when I owed like $2800 in taxes on my UI benefits. You should start having taxes withheld from your weekly claims if you're still receiving them.
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Isla Fischer
•How do I set up tax withholding on my Washington ESD benefits? I'm still filing weekly claims.
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Ruby Blake
•Log into your account and look for the tax withholding option when you file your weekly claim. I think it's 10% federal withholding.
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Micah Franklin
This is a really common question and unfortunately catches a lot of people off guard. Unemployment benefits from Washington ESD are considered taxable income by the IRS, just like wages from a job. The only exception was 2020 when the first $10,200 was tax-free due to COVID relief, but that was just for that one year. You'll want to report all your UI benefits on your tax return.
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Ella Harper
•Wait, so if I got unemployment in 2024, none of it is tax-free? I thought there was still some COVID exception.
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Micah Franklin
•No, the COVID tax relief for unemployment was only for 2020. All unemployment benefits received in 2021 and after are fully taxable at federal level.
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PrinceJoe
I had the same panic when I realized this! If you're having trouble getting through to Washington ESD to set up withholding or get your 1099-G, I found this service called Claimyr that helped me actually reach someone. They have a website at claimyr.com and there's a demo video at https://youtu.be/7DieNd3C7zQ that shows how it works. Really saved me hours of trying to call.
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Brooklyn Knight
•Never heard of Claimyr, is it legit? I've been trying to reach Washington ESD for weeks about my tax documents.
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PrinceJoe
•Yeah it's real, they just help you get through the phone system faster. I was skeptical too but it actually worked for me.
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Owen Devar
this is why the unemployment system is so messed up, they dont tell you about taxes until its too late and then you owe thousands
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Miles Hammonds
•Actually Washington ESD does mention the tax implications, it's just easy to miss in all the paperwork and online info.
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Owen Devar
•well they should make it more obvious because this catches people off guard all the time
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Isla Fischer
Update: I found the tax withholding option in my Washington ESD account and set it to 10% federal withholding. Better late than never I guess. Still worried about what I'll owe for the benefits I already received without withholding.
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Micah Franklin
•Good that you set up withholding going forward. For what you already received, you'll want to calculate roughly 10-22% of your total benefits depending on your tax bracket and set aside money for taxes.
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Isla Fischer
•Ugh, that's going to be a lot of money. I wish I had known this earlier.
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Ella Harper
So just to be clear - in Washington state we don't pay state taxes on unemployment but we do pay federal taxes? And there's no amount that's tax-free anymore?
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Miles Hammonds
•Correct, Washington has no state income tax so no state taxes on UI benefits. But all unemployment benefits are taxable federally, no exceptions after 2020.
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Ella Harper
•Thanks for clarifying, that's what I thought but wanted to make sure.
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Daniel Rivera
I made this same mistake in 2022 and ended up owing $3100 in taxes on my unemployment. The IRS let me set up a payment plan though. Just don't ignore it if you can't pay it all at once.
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Isla Fischer
•How do you set up a payment plan with the IRS? I'm definitely going to need that option.
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Daniel Rivera
•You can do it online on the IRS website or call them. The online tool is pretty easy to use and you can set up monthly payments.
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Sophie Footman
Does anyone know if the taxes are taken out automatically when you elect withholding or do you have to do quarterly payments?
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Micah Franklin
•When you elect federal withholding through Washington ESD, they automatically deduct 10% from each weekly payment and send it to the IRS for you. No need for quarterly payments if you have withholding set up.
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Sophie Footman
•Perfect, that makes it much easier. Thanks!
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Connor Rupert
i think its crazy that unemployment is taxed when you already paid into it through your paychecks when you were working
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Miles Hammonds
•Actually, unemployment insurance premiums are paid by employers in Washington, not employees. So you didn't pay into it directly through payroll deductions.
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Connor Rupert
•oh i didnt know that, thought it came out of my check like social security
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Molly Hansen
For anyone still trying to reach Washington ESD about tax questions, I had success using Claimyr recently. They help you get through to an actual person instead of sitting on hold forever. Really worth it if you need to resolve tax withholding issues or get missing documents.
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Isla Fischer
•I might try that, I still haven't been able to get my 1099-G and tax season is coming up fast.
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Molly Hansen
•Yeah definitely check out their demo video first to see how it works. Made the whole process way less stressful for me.
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Brady Clean
The tax situation really depends on your total income for the year. If your unemployment benefits plus any other income puts you below the standard deduction, you might not owe anything. But most people will owe something.
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Skylar Neal
•True, but it's still good to have taxes withheld just in case. Better to get a refund than owe money.
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Brady Clean
•Absolutely agree. Always better to overwithhold slightly than to underpay and owe penalties.
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Vincent Bimbach
I'm dealing with the same issue right now. Got laid off in March and have been on unemployment since then. Just realized I need to pay taxes on all of it. Setting up withholding today.
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Isla Fischer
•At least you figured it out before the end of the year! I'm kicking myself for not realizing this sooner.
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Vincent Bimbach
•Yeah I got lucky and saw this thread. Going to call Washington ESD today to make sure my withholding is set up correctly.
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Kelsey Chin
PSA: If you can't afford to pay the taxes you owe on unemployment, the IRS has several options including payment plans and hardship deferrals. Don't just ignore it hoping it will go away.
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Norah Quay
•This is important advice. The IRS is actually pretty reasonable about payment plans if you're proactive about it.
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Kelsey Chin
•Exactly. They just want to get paid eventually, they're not trying to ruin people's lives over it.
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Leo McDonald
Quick question - if I had taxes withheld from some of my unemployment payments but not others, how does that work on my tax return?
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Micah Franklin
•Your 1099-G will show both your total benefits received and the total federal taxes withheld. You'll report both numbers on your tax return and get credit for whatever was withheld.
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Leo McDonald
•Got it, so it all evens out based on what was actually withheld. Thanks for explaining that.
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Jessica Nolan
For what it's worth, if you're getting close to the end of your benefit year and haven't had withholding, you might want to make quarterly estimated tax payments to avoid penalties. The IRS doesn't like it when you owe more than $1000.
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Angelina Farar
•How do you calculate quarterly payments for unemployment benefits? Is there a simple formula?
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Jessica Nolan
•Generally you'd take your total expected UI benefits for the year, multiply by your tax rate (probably 10-22%), and divide by 4 for quarterly payments. But definitely consult a tax professional for your specific situation.
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Sebastián Stevens
I've been using Claimyr to get through to Washington ESD and it's been a game changer. Finally got my 1099-G sorted out and confirmed my withholding settings. Way better than spending hours on hold.
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Isla Fischer
•I keep hearing about this service. Might have to try it since I still can't get through to Washington ESD directly.
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Sebastián Stevens
•Definitely worth trying. The demo at https://youtu.be/7DieNd3C7zQ shows exactly how it works.
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Bethany Groves
Just wanted to add that if you received unemployment in 2024, you should receive your 1099-G by January 31st, 2025. If you don't get it by early February, definitely contact Washington ESD to get a copy.
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KingKongZilla
•Good reminder. And you can usually download it from your online account before it arrives in the mail.
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Bethany Groves
•Yes, the online version is usually available earlier than the mailed copy.
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Rebecca Johnston
Bottom line - unemployment is not tax free, set up withholding if you're still getting benefits, and save money for taxes if you didn't have withholding earlier in the year. Learned this lesson the expensive way myself.
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Isla Fischer
•Thanks everyone for all the advice. This thread has been super helpful and I feel like I know what I need to do now.
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Rebecca Johnston
•Glad it helped! Tax season is stressful enough without surprises about unemployment benefits.
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Nathan Dell
One more tip - if you're doing your own taxes, make sure to use the exact amounts from your 1099-G. Don't try to estimate or use your own calculations, it needs to match what Washington ESD reported to the IRS.
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Maya Jackson
•This is really important. The IRS automatically matches what you report to what they received from Washington ESD.
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Nathan Dell
•Exactly, any discrepancies will trigger an audit or correction notice from the IRS.
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