Washington ESD unemployment benefits - is unemployment taxable on my tax return?

Yes, unemployment benefits are taxable at the federal level. Washington state doesn't have a state income tax so you don't need to worry about that part. You should receive a 1099-G form from Washington ESD showing how much you received in benefits for 2024.

ugh yes learned this the hard way last year, owed like $800 in taxes because I didn't have anything withheld from my UI payments

Yes, unemployment benefits are absolutely taxable as regular income at both federal and state levels. Washington ESD should have given you the option to withhold 10% for federal taxes when you filed your initial claim. If you didn't elect withholding, you'll need to pay taxes on the full amount when you file your return.

The tax withholding option is something you can change anytime while you're collecting benefits. Log into your Washington ESD account and look for the tax withholding section. It's usually under account settings or payment preferences. Having 10% withheld is often not enough if you're in a higher tax bracket, so you might want to make quarterly estimated payments too.

I made the same mistake last year - didn't have taxes withheld and ended up owing like $1,200 at tax time. Definitely try to get the withholding started ASAP. You can also make quarterly estimated tax payments to avoid a big bill later.

I had a nightmare time trying to get through to Washington ESD to set up tax withholding last year. Spent hours on hold and kept getting disconnected. Finally found this service called Claimyr that helped me get through to an actual agent in like 20 minutes. They have a website at claimyr.com and there's a demo video at https://youtu.be/7DieNd3C7zQ that shows how it works. Totally worth it if you need to talk to someone at Washington ESD about your tax options.

Quick tip - if you can't get through to Washington ESD to change your withholding settings, there's a service called Claimyr that helps people actually reach ESD agents by phone. Check out claimyr.com - they have a demo video at https://youtu.be/7DieNd3C7zQ that shows how it works. Might be worth it to get this tax issue sorted out quickly.

wait so if I made 50k last year but was unemployed for 3 months and got like 6k in benefits, do I pay taxes on the full 56k?? that seems crazy

Just a heads up - Washington state doesn't have income tax, so you only need to worry about federal taxes on your unemployment benefits. But yeah, definitely get that withholding started if you can. Better to have it taken out automatically than scramble at tax time.

ugh the tax thing is so confusing... i never know what to do about this stuff. do they send you like a tax form at the end of the year or something??

Update: I logged into my Washington ESD account and found the 1099-G under documents. Shows I received $4,847 in benefits for 2024. Now I'm worried about owing money since I didn't have any taxes withheld.

I've been dealing with this exact issue. Called Washington ESD like 20 times trying to get my withholding changed and kept getting hung up on. Finally used that Claimyr service someone mentioned and got through to an agent in less than 10 minutes. Cost me a few bucks but totally worth it to get this sorted out before I owe thousands in taxes.

The whole unemployment tax thing is so confusing! I thought since Washington doesn't have state income tax that unemployment wouldn't be taxable at all. Had to learn the hard way that federal and state taxes are totally different things.

Pro tip: if you're still collecting unemployment, set up the tax withholding NOW before you get more benefits. Don't wait until tax season like I did. The surprise tax bill is not fun.

Pro tip: even if you start withholding now, you should still set aside some money from what you've already received. Calculate roughly 22% of your total benefits so far and try to save that for taxes. Better safe than sorry.

For anyone still looking for the tax withholding option in their Washington ESD account: it's usually in the 'Manage Your Claim' section under payment preferences. You can choose to have 10% federal tax withheld from future payments. You can't retroactively have taxes withheld from payments already received though.

I've been doing my own taxes for years and unemployment benefits always go on line 7 of Form 1040 with your other income. Make sure you have that 1099-G from Washington ESD when you file. If you can't find it online, you can request a duplicate.

Just went through this whole process myself. Ended up owing about $500 in federal taxes on my unemployment benefits. Not the end of the world but definitely wished I had known to have taxes withheld. Live and learn I guess.

This thread is so helpful! I was totally clueless about unemployment being taxable. Been putting off doing my taxes because I was confused about how to handle the UI benefits. Now I know I need to find my 1099-G and include it with my other income.

Anyone know if there are any deductions or credits that help offset the tax on unemployment income? Seems unfair to tax people who are already struggling financially.

I tried calling Washington ESD last month to ask about getting a duplicate 1099-G and it was impossible to get through. Finally used that Claimyr service someone mentioned earlier and got connected to an agent right away. They were able to mail me a new copy within a few days. Super helpful for tax season.

For anyone doing their taxes with software like TurboTax or H&R Block, they'll ask you specifically about unemployment income and have you enter the amount from your 1099-G. Pretty straightforward once you have the form.

PSA: Don't forget that if you received unemployment benefits, you might also be eligible for certain tax credits that could offset some of the tax burden. Look into things like the Child Tax Credit or Earned Income Credit if they apply to your situation.

One thing that caught me off guard was that unemployment benefits can also affect your eligibility for certain tax credits. The income limits include your UI benefits, so it might push you over the threshold for some programs.

Thanks everyone for all the helpful info! This thread answered pretty much every question I had about unemployment and taxes. Definitely going to set up tax withholding if I ever have to collect benefits again.

Just wanted to add that if you're really struggling with the tax burden from unemployment benefits, you might be able to set up a payment plan with the IRS if you owe money. They're usually pretty reasonable about working with people who are having financial difficulties.

This is why I always elect for max withholding on everything - unemployment, retirement, everything. I'd rather get money back than owe it. The government getting an interest-free loan from me is better than me scrambling to pay taxes.

Just to add some perspective - I owed about $800 on $8,000 in unemployment benefits last year. Wasn't fun but wasn't the end of the world either. If you can't afford to pay it all at once, the IRS has payment plans available.

Does anyone know if there are any deductions or credits that can help offset the tax burden from unemployment benefits? Like job search expenses or anything like that?

Another vote for Claimyr here - used them twice to get through to Washington ESD agents when I couldn't get through on my own. Once for a claim issue and once to update my tax withholding. Way less stressful than sitting on hold for hours.

For what it's worth, I think the 10% federal withholding option that Washington ESD offers is probably not enough for most people. I had that elected and still owed money at tax time. Might be worth doing quarterly estimated payments on top of the withholding.

THE WHOLE TAX SYSTEM IS RIDICULOUS! Why don't they just automatically withhold the right amount instead of making us guess? And why is it so hard to reach someone at ESD to make changes? This whole system is broken.

Quick question - does the 1099-G form they send show how much tax was withheld, or just the total benefits? I want to make sure I can properly report everything on my tax return.

I'm in a similar boat - been collecting for 3 months with no withholding. Think I'm going to try that Claimyr service to get through to ESD and change my settings. Better to deal with this now than get hit with a big tax bill later.

Just want to add that if you do owe taxes on your unemployment benefits, you might also owe state taxes if you move to a different state during the year. Washington has no income tax but other states do.

Update: I used Claimyr yesterday and was able to get through to an ESD agent in about 15 minutes. Changed my withholding to 10% federal and also asked about making a lump sum payment for taxes on benefits I've already received. The agent was really helpful and explained all my options.

Thanks everyone for all the helpful info. I'm definitely going to get my withholding changed and start setting aside money for taxes. Better to be prepared than get hit with a surprise bill!