Washington ESD unemployment benefits taxable as income - confused about tax implications

Yes, unemployment benefits are definitely taxable income at the federal level. Washington doesn't have state income tax so you don't need to worry about that part. But the IRS treats your UI payments just like regular wages for tax purposes.

I made this same mistake last year! Didn't know unemployment was taxable and ended up owing $1,200 in taxes. Now I always have 10% withheld from my weekly claims.

I had the same issue trying to set up tax withholding. Couldn't get through to anyone at Washington ESD for weeks. Finally found this service called Claimyr at claimyr.com that helped me get connected to an actual agent. They have a demo video at https://youtu.be/7DieNd3C7zQ showing how it works. Made the whole process so much easier.

You should definitely start having taxes withheld ASAP. The standard rate is 10% for federal taxes. Better to have them take it out now than owe a big chunk at tax time.

THIS IS SO STUPID!!! Why doesn't Washington ESD automatically withhold taxes like regular employers do?? Now I'm going to owe thousands and I don't have the money!

You'll get a 1099-G form from Washington ESD at the end of the year showing how much you received in benefits. That's what you'll need to report on your tax return.

I learned this the hard way too. Ended up having to set up a payment plan with the IRS because I couldn't afford to pay the full amount. Start saving money now for your tax bill!

wait unemployment is taxable?? I thought it was like welfare or something

Pro tip: If you can't afford to pay your full tax bill when you file, the IRS has payment plan options. Don't just ignore it or you'll end up with penalties and interest.

I tried calling Washington ESD about setting up withholding but kept getting disconnected. Finally used that Claimyr service someone mentioned and got through in like 20 minutes. Worth it to avoid the headache of trying to call on your own.

Another thing to consider - if you're doing any side work while on unemployment, that income is also taxable AND you need to report it to Washington ESD. Don't want to get in trouble for not reporting work.

My sister went through this last year. She didn't have taxes withheld and ended up owing $2,000. Now she always tells everyone to set up withholding right away.

The good news is that if you usually get a tax refund, the unemployment taxes might just reduce your refund instead of making you owe money. Depends on your situation though.

Make sure you keep good records of your unemployment payments throughout the year. Makes tax time much easier when you have everything organized.

I used to work at a tax office and saw this ALL the time. People would come in shocked that they owed money on their unemployment. It's definitely not well explained by Washington ESD.

If you're really worried about the tax implications, consider talking to a tax professional. They can help you figure out exactly how much you might owe and plan accordingly.

One more thing - if you move to a different state while collecting unemployment, you might have to deal with that state's income tax too. Something to keep in mind.

Bottom line: unemployment is taxable income, set up withholding if you can, and save money for taxes if you don't. Better to be prepared than get hit with a big bill later.

Update us when you get it figured out! I'm sure other people have this same question and could benefit from knowing how it goes.