Washington ESD unemployment benefits - is unemployment unearned income for tax purposes?

Unemployment benefits are considered taxable income by the IRS, but they're not classified as 'unearned income' in the traditional sense. They should be reported as unemployment compensation on your tax return. The 1099-G you received from Washington ESD shows the total amount you received during the tax year.

Thanks! So I should put it in the unemployment section of my tax software, not the unearned income section?

Exactly! Most tax software has a specific section for unemployment compensation. Just enter the amount from Box 1 of your 1099-G form there.

Wait I'm confused about this too. I thought unemployment was considered unearned income because you're not working for it? I've been putting mine in the wrong section for years apparently...

It's a common misconception! Unemployment benefits are taxable income but they have their own category on tax forms. Unearned income typically refers to things like interest, dividends, and rental income.

Ugh great, now I'm wondering if I need to amend my previous returns. This is so confusing.

I had trouble getting through to Washington ESD last year when I needed clarification on my 1099-G. The phone lines were always busy and I kept getting disconnected. Finally used a service called Claimyr (claimyr.com) that helped me get connected directly to an agent. They have a video demo at https://youtu.be/7DieNd3C7zQ that shows how it works. Made it so much easier than trying to call on my own.

Never heard of that service before. How does it work exactly? I've been struggling to reach Washington ESD for weeks about my claim status.

It basically helps you get through the phone system and connects you with an actual person at Washington ESD. Way better than sitting on hold for hours or getting hung up on.

Interesting, I might have to check that out. I've been trying to call about my adjudication status for over a month with no luck.

For tax purposes, unemployment benefits are definitely taxable income but they're reported separately from other income types. The key thing is making sure you report the full amount from your 1099-G. Some people forget that any federal taxes withheld from their benefits (if they elected to have them withheld) will show up in Box 4 of the form.

I didn't have any taxes withheld from my benefits. Should I have? Am I going to owe a lot when I file?

It depends on your total income for the year and tax situation. If you didn't have taxes withheld and unemployment was a significant portion of your income, you might owe some taxes. But it's hard to say without knowing your full financial picture.

just went through this same thing last week! unemployment is NOT unearned income its unemployment compensation. completely different category on taxes. i was putting it wrong for 2 years until my tax guy corrected me

Did you have to amend your old returns or was it not a big deal?

my tax guy said it probably didnt change anything since the total income was the same just in different categories. but he checked to make sure

I'm dealing with a similar issue but I never received my 1099-G from Washington ESD. I've been trying to call them for weeks to get a copy but can never get through. The website says I can access it online but my account is locked and I can't reset it. Anyone know how to get a copy of the form?

You should be able to get your 1099-G through your SecureAccess Washington (SAW) account if you can get it unlocked. Otherwise, you might need to request a copy directly from Washington ESD.

That's the problem - I can't get my SAW account unlocked and I can't reach anyone at Washington ESD by phone. It's incredibly frustrating.

This is exactly the kind of situation where that Claimyr service I mentioned earlier would help. They specialize in getting people connected to Washington ESD agents when the normal phone lines aren't working.

The whole tax situation with unemployment is really confusing. I got benefits in 2024 but I also had some part-time work, so I'm not sure how to handle the combination. My Washington ESD weekly claims showed the work I was doing, but I'm worried about how to report everything correctly on my taxes.

You'll report your work income on the appropriate tax forms (W-2s, 1099s, etc.) and your unemployment benefits from the 1099-G separately. They're different types of income but both are taxable.

That makes sense. I was worried there might be some kind of double-counting issue since Washington ESD knew about my work income when calculating my benefits.

This is making me realize I have no idea what I'm doing with my taxes. I got unemployment for about 6 months last year plus had a couple part-time jobs. Everything is so complicated and I keep seeing conflicting information online about how to handle unemployment benefits.

It might be worth consulting with a tax professional if your situation is complicated. The basic rule is that unemployment benefits are taxable income reported in their own section, but individual circumstances can vary.

Yeah, I think I need to find someone who can help me sort through all of this. I don't want to mess up my taxes because I didn't understand something.

Has anyone had issues with the amount on their 1099-G not matching what they think they received? I calculated my total benefits for 2024 and it's about $300 more than what's on the form from Washington ESD. I'm not sure if I made an error or if there's something wrong with the form.

The 1099-G shows the total amount paid during the calendar year, which might not match the benefit weeks you're thinking of if payments crossed over from December to January or vice versa.

That could be it. I did get a payment in early January 2024 that was for the last week of December 2023. So confusing how they handle the timing.

Thanks everyone for the help! I feel much better about filing my taxes now. I was really worried I was going to mess something up with the unemployment benefits reporting.

You're welcome! Just remember to keep a copy of your 1099-G with your tax records in case you need it later.

One thing to keep in mind is that if you received unemployment benefits and your income was low enough, you might be eligible for the Earned Income Tax Credit even though unemployment isn't considered 'earned' income. It's worth checking if you qualify.

I hadn't thought about that. My total income for 2024 was pretty low since I was unemployed for most of the year.

Definitely worth looking into. The EITC can be a significant credit for people with lower incomes, even if some of that income came from unemployment benefits.

Update on my 1099-G situation - I finally got through to Washington ESD using that Claimyr service someone mentioned. The agent was able to help me access my form online and explained why my account was locked. Turns out there was a security flag on my account that needed to be cleared manually. Would have taken me forever to figure that out on my own.

That's great! I'm glad the service worked out for you. It really does make a difference when you can actually talk to someone who knows what they're doing.

Absolutely. I was getting so frustrated trying to deal with the automated system and getting nowhere. Having a real person walk me through the issue was exactly what I needed.

I work as a tax preparer and see this confusion about unemployment benefits every year. They are definitely taxable income but not 'unearned income' in the tax code sense. The IRS has specific categories for different types of income, and unemployment compensation has its own section on tax forms.

That's really helpful to hear from someone who does this professionally. Are there any other common mistakes people make with unemployment benefits on their taxes?

The biggest mistakes I see are people not reporting unemployment at all (thinking it's not taxable) or reporting it in the wrong category. Also, people sometimes forget about the federal taxes that were withheld if they elected to have them taken out.

This thread has been really helpful! I was totally confused about this whole thing. I thought since I wasn't working that unemployment would be considered unearned income like interest or dividends. Good to know it has its own category.

It's a very common misconception. The tax code can be confusing with all the different categories of income.

btw for anyone still trying to reach washington esd about their 1099-G or other issues, the best time to call is right when they open at 8am. but even then its hit or miss. that claimyr thing might be worth it if you really need to talk to someone

I've tried calling right at 8am multiple times and still can't get through. The phone system is just overwhelmed I think.

yeah its pretty bad. i gave up trying to call the regular way after about 20 attempts over two weeks

For what it's worth, if you're using tax software like TurboTax or H&R Block, they usually have a specific section for unemployment benefits that walks you through exactly how to enter the information from your 1099-G. Makes it pretty straightforward once you know where to look.

That's what I ended up doing. Once I found the right section in my tax software, it was actually pretty easy to enter the information.

Question about state taxes - I know federal taxes treat unemployment as taxable income, but what about Washington state? Do I need to worry about state taxes on my unemployment benefits?

Washington state doesn't have a state income tax, so you don't need to worry about reporting your unemployment benefits to the state. Just federal taxes apply.

Oh right, I forgot Washington doesn't have state income tax. That makes things simpler at least!

I'm in a weird situation where I received unemployment benefits in 2024 but I moved to Washington from another state partway through the year. I got benefits from both states. Do I need to report both 1099-G forms?

Yes, you'll need to report unemployment benefits from both states on your federal tax return. Each state that paid you benefits should have sent you a separate 1099-G form.

That's what I figured but wanted to make sure. I have both forms so I should be all set.

This has been a really informative thread. I've been putting off doing my taxes because I was confused about the unemployment benefits, but now I feel like I understand what I need to do. Thanks everyone!

You're welcome! Don't wait too long to file - the deadline will be here before you know it.

One last tip for anyone reading this - if you're still confused about your specific tax situation with unemployment benefits, the IRS has a pretty good FAQ section on their website about unemployment compensation and taxes. It's worth checking out if you need more detailed information.

Good suggestion. I'll bookmark that page for future reference. Thanks for all the help everyone!