Washington ESD unemployment benefits - what rate is unemployment taxed at?
Just received my first unemployment payment from Washington ESD and realized I need to figure out the tax situation. I know unemployment benefits are taxable income but I'm not sure what rate is unemployment taxed at for federal and state purposes. Should I have taxes withheld from my weekly claims or just pay quarterly? My benefit amount is $467 per week and I'm worried about owing a huge tax bill next year if I don't handle this right.
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Nolan Carter
Unemployment benefits are taxed as ordinary income at your regular tax rate, not a special rate. For federal taxes, it depends on your total income bracket - could be anywhere from 10% to 37%. Washington state has no income tax so you don't worry about state taxes on unemployment.
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Daniel White
•Thanks! So it's just my normal tax bracket rate? I was making about $45k before getting laid off so I think that puts me in the 22% bracket.
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Nolan Carter
•Actually at $45k you'd be in the 12% bracket for 2024, not 22%. The 22% bracket starts around $47k for single filers. But remember that's marginal rate - not all your income gets taxed at that rate.
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Natalia Stone
I always have 10% withheld from my Washington ESD payments just to be safe. You can set this up when you file your weekly claims online. Better to get a refund than owe money!
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Daniel White
•How do you set up the withholding? I don't remember seeing that option when I filed my last weekly claim.
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Natalia Stone
•When you're doing your weekly claim filing, there should be a section about tax withholding. You can choose to have 10% withheld for federal taxes. It's optional but I recommend it.
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Tasia Synder
Been dealing with this same issue and couldn't get through to Washington ESD to ask about the withholding options. Their phone lines are always busy. Finally used Claimyr.com to get connected to an actual agent who explained the whole tax situation to me. They have a video demo at https://youtu.be/7DieNd3C7zQ that shows how it works. Way easier than sitting on hold for hours.
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Daniel White
•Never heard of Claimyr but calling Washington ESD is definitely impossible. Did they charge you to make the call connection?
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Tasia Synder
•Yeah there's a fee but honestly worth it to actually talk to someone who could answer my tax questions. The agent confirmed the 10% withholding option and helped me set it up for future claims.
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Selena Bautista
just got my 1099-G form yesterday and wow did not realize how much I'd have to pay back. definitely should have had taxes withheld
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Daniel White
•How much did you end up owing if you don't mind me asking? I'm trying to figure out if I should start withholding now.
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Selena Bautista
•ended up owing like $2800 on about $15k in benefits. really wish someone had explained this better when I first started claiming
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Mohamed Anderson
The tax rate depends on your total income for the year, including unemployment benefits. If unemployment is your only income, you might be in a lower bracket than when you were working. But if you find another job partway through the year, that could push you into a higher bracket.
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Daniel White
•Good point. I'm hoping to find work soon so I should probably plan for being in a higher bracket just in case.
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Ellie Perry
•This is exactly what happened to me. Got a job in September and ended up owing way more than expected because my unemployment plus new job income pushed me up a bracket.
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Landon Morgan
WASHINGTON ESD NEEDS TO MAKE THIS CLEARER! I had no idea unemployment was even taxable until I got my 1099-G. The whole system is set up to screw people over who are already struggling.
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Nolan Carter
•I agree they should explain it better, but unemployment has always been taxable income. It's been that way for decades.
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Landon Morgan
•Well they sure don't make it obvious when you're filing claims every week. Should be required to tell people upfront.
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Teresa Boyd
Pro tip: if you're getting $467/week that's about $24k annually. Depending on your filing status and other deductions, you might not owe as much as you think. Standard deduction for 2024 is $14,600 for single filers.
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Daniel White
•So if I only collect unemployment for the full year, I'd only pay taxes on about $9,400? That would put me in the 10% bracket right?
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Teresa Boyd
•Exactly! $9,400 would definitely be in the 10% bracket. So you'd owe around $940 in federal taxes, maybe less with other credits.
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Natalia Stone
I still think having the 10% withheld is the safest bet. Even if you get a refund, at least you're not scrambling to pay a big tax bill.
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Daniel White
•You've convinced me. I'm going to set up the withholding on my next weekly claim. Better safe than sorry.
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Lourdes Fox
my cousin used that claimyr thing to talk to washington esd about taxes too. said it was super easy and the agent walked her through setting up withholding
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Bruno Simmons
•How long did it take to get connected? I've been trying to call Washington ESD for weeks about my adjudication issue.
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Lourdes Fox
•she said like 10 minutes or something. way better than the 3 hours she spent on hold before giving up
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Aileen Rodriguez
Don't forget about quarterly estimated payments if you're not having taxes withheld! The IRS wants their money throughout the year, not just at tax time.
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Daniel White
•Ugh, quarterly payments sound complicated. I think I'll just stick with the 10% withholding option.
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Aileen Rodriguez
•Yeah, withholding is definitely easier. Less to keep track of and you don't have to worry about underpayment penalties.
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Ellie Perry
One thing to watch out for - if you have other income during the year (like a spouse's income or investment income), that unemployment could push you into a higher bracket than you expect.
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Daniel White
•I'm single and unemployment is my only income right now, so hopefully I'll stay in a lower bracket.
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Zane Gray
The whole tax situation with unemployment is so confusing. Wish Washington ESD would just automatically withhold taxes like regular employers do with paychecks.
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Nolan Carter
•They do offer automatic withholding, it's just optional. You have to elect it when filing your weekly claims.
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Zane Gray
•Oh really? I never noticed that option. I'll have to look more carefully next time I file.
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Maggie Martinez
been on unemployment for 8 months and just found out about the tax withholding option last week through claimyr when I finally got through to ask about my claim status. wish I'd known sooner!
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Daniel White
•Better late than never I guess! Are you going to start withholding now or just deal with it at tax time?
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Maggie Martinez
•definitely starting withholding now. don't want to get hit with a huge bill next april
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Alejandro Castro
Remember that unemployment benefits are also subject to self-employment tax if you're doing any freelance or gig work on the side.
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Daniel White
•Wait, really? I've been doing some DoorDash deliveries while on unemployment. Does that affect how my unemployment gets taxed?
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Alejandro Castro
•The unemployment itself isn't subject to SE tax, but your DoorDash income is. Just make sure you're tracking those earnings and reporting them on your weekly claims too.
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Monique Byrd
PSA: make sure you're reporting any income from side gigs on your weekly claims! Washington ESD will find out eventually and you could end up with an overpayment issue.
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Daniel White
•Yeah I've been reporting my DoorDash earnings every week. Only made like $150 total so far but better to be honest about it.
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Jackie Martinez
The tax rate question really depends on your total annual income. If you're collecting unemployment for just part of the year and then get a job, your effective rate could be higher than if unemployment was your only income all year.
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Daniel White
•That makes sense. I'm hoping to find work within the next few months so I should probably plan for a higher rate just to be safe.
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Lia Quinn
just want to add that the 1099-G form you get from washington esd will show exactly how much you received in benefits. make sure to double check it against your records
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Daniel White
•Good tip! I've been keeping track of my payments in a spreadsheet so I can compare when I get the form.
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Haley Stokes
Been collecting unemployment for 6 months and having 10% withheld the whole time. Feel much better knowing I won't owe a big chunk at tax time. Highly recommend setting up the withholding from the start.
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Daniel White
•Thanks for sharing your experience! I'm definitely going to set it up this week when I file my claim.
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Asher Levin
One last thing - if you do end up owing taxes on your unemployment, you can sometimes set up a payment plan with the IRS if you can't pay it all at once.
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Daniel White
•Good to know there are options if I end up owing more than expected. Hopefully the withholding will take care of most of it though.
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Serene Snow
This whole thread has been super helpful! I had no idea about most of this tax stuff. Going to set up withholding on my next claim for sure.
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Daniel White
•Same here! Really glad I asked about this now rather than finding out the hard way next tax season.
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