Washington ESD unemployment benefits - is unemployment taxable for 2025?

Yes unemployment benefits are definitely taxable income at the federal level. Washington state doesn't have income tax so you don't worry about that part, but the IRS treats UI benefits as regular income. You should have gotten a 1099-G form from Washington ESD showing how much you received.

ugh yes learned this the hard way last year... ended up owing like $1200 because I spent all my unemployment money on bills and didn't save anything for taxes

You can actually have taxes withheld from your weekly unemployment payments if you want. When you file your weekly claim there should be an option to have federal taxes taken out automatically. I wish I had done this from the start instead of trying to save money myself.

Yes, unemployment benefits are considered taxable income at the federal level. Washington state doesn't have income tax so you don't worry about state taxes, but you'll need to report it on your federal return. You should have received a 1099-G form from Washington ESD showing how much you received.

Had a friend who got really stressed about this whole tax situation and couldn't get through to Washington ESD to ask questions. She ended up using claimyr.com to actually reach someone at Washington ESD who explained the whole withholding process. There's even a demo video at https://youtu.be/7DieNd3C7zQ that shows how it works. Might be worth checking out if you have other questions about your claim.

The whole tax thing is so confusing. I thought there was something during covid where unemployment wasn't taxable but I guess that changed?

Another thing to watch out for - if you're collecting unemployment and then get a job partway through the year, make sure your new employer knows you received UI benefits so they can adjust your withholding properly

ugh yes learned this the hard way last year. ended up owing like $800 in taxes because i had no idea unemployment was taxable

For anyone reading this thread later - you can find your year-to-date benefit amount in your Washington ESD online account under payment history. That's the number you'll need for tax planning purposes.

Does anyone know if the job search requirements affect the taxability at all? Like if I'm on standby vs regular UI?

You can actually have taxes withheld from your unemployment benefits when you're filing your weekly claims. There's an option in your Washington ESD account to have 10% withheld for federal taxes. It's under the payment preferences section.

Pro tip: if you do owe taxes on your unemployment and can't pay it all at once, the IRS has payment plans available. Don't just ignore it if you end up owing money.

I'm dealing with an overpayment issue with Washington ESD right now and wondering if that affects my taxes too. Anyone know?

Had the same issue trying to figure out my tax situation. Couldn't get through to Washington ESD on the phone for weeks to ask about my 1099-G. Finally found this service called Claimyr that helped me get connected to an actual agent. They have a website at claimyr.com and there's a demo video at https://youtu.be/7DieNd3C7zQ that shows how it works. Got my questions answered same day.

wait so if i made like $15000 in unemployment last year i have to pay taxes on ALL of that?? that seems crazy

The whole tax thing with unemployment is such a mess. Like we're already struggling financially and then they want to tax the little help we get. Makes no sense to me.

Pro tip: if you didn't have taxes withheld and you're worried about owing a lot, you can make estimated tax payments throughout the year or adjust your withholdings at a new job to cover what you'll owe on your unemployment.

wait so if I collected unemployment in 2024 I need to report it on my 2024 tax return that I'll file in 2025? Not trying to be dumb but want to make sure I understand the timing

also make sure you keep track of any job search expenses like gas for interviews, resume printing, etc. some of that stuff might be deductible

This thread is really helpful. I had no idea about the withholding option and I've been stressing about setting money aside manually.

One more thing - if you moved to look for work or took a job in a different city, some of those moving expenses might be deductible too. The IRS has specific rules about work-related moves.

this is why i always tell people to have something withheld. even if its just 5-10% it helps at tax time

For what it's worth, I used a tax prep service last year and they were familiar with unemployment benefit taxation. Might be worth the cost if you're worried about messing it up.

Another thing about that Claimyr service I mentioned - they were really helpful when I needed to get my payment history for tax prep. Sometimes the online account doesn't show everything clearly and talking to an actual Washington ESD person made a huge difference.

For anyone wondering about timing - you'll get your 1099-G by January 31st at the latest. Washington ESD is usually pretty good about getting them out on time.

i had a friend who forgot to report unemployment on their taxes and got audited. definitely dont skip reporting it even if you think its not much money

Quick reminder that if you received unemployment in 2021, there was a special $10,200 exclusion that year due to COVID, but that doesn't apply to 2024 or 2025 benefits. All unemployment is fully taxable now.

The tax rate depends on your total income but generally expect to owe around 12-22% in federal taxes on your unemployment benefits if thats your main income source

If you're still receiving benefits, definitely log into your Washington ESD account and set up tax withholding now. Go to 'Manage Claimant Account' then 'Payment Method and Tax Withholding' and select the federal withholding option.

does anyone know if theres a difference between regular UI benefits and other types like standby pay for taxes?

This thread is super helpful! I had no idea about most of this tax stuff. Going to check my account right now and see about getting my 1099-G early online.

One last plug for that Claimyr service - if anyone needs to talk to Washington ESD about their tax documents or payment history and can't get through the regular phone lines, it's been a lifesaver for me. Way better than spending hours on hold or getting disconnected.

thanks everyone this has been really helpful. never realized how complicated the tax side of unemployment could be

The Washington ESD website has some basic tax info too but it's pretty limited. Most of the detailed stuff you have to figure out from IRS publications.

Just want to echo what others said about the 10% withholding option. I started doing that in November and it gives me peace of mind knowing at least something is being set aside for taxes.

One more thing - make sure you keep good records of all your unemployment payments in case there are any discrepancies with the 1099-G form when you get it.

This whole thread has been eye-opening. Thanks everyone for sharing your experiences with the tax side of unemployment benefits.