Washington ESD unemployment compensation benefits received are taxable - confused about tax forms

I just checked my SAW account and found the 1099-G! It shows I received $18,200 total. Is that amount going to be added to my regular income for taxes?

Exactly - that $18,200 gets added to any other income you had for 2024. So if you worked part of the year and made $15,000, your total taxable income would be $33,200.

That would have been so helpful to know! I'm still filing weekly claims now so I'll definitely set up the withholding.

Just remember 10% might not be enough depending on your total income and tax bracket. You might want to calculate what you'll actually owe.

Never heard of that service before. Did they charge you a lot to make the call?

It was worth it for me since I was getting nowhere with the regular phone system. The agent explained everything about the 1099-G and even helped me understand how to report it correctly.

$2,800?! Oh no, now I'm really worried about how much I might owe...

That seems really high. What was your total unemployment amount? The tax you owe depends on your total income and filing status.

Thank you for breaking this down! Should I be worried about penalties since I didn't pay estimated taxes throughout the year?

If you didn't owe taxes last year or if this year's tax bill is less than $1,000, you usually won't face penalties. But it's worth checking with a tax professional.

Yes, you still need to report the full amount as income on your tax return. The withholding just means you prepaid some of the taxes - you might get a refund if too much was withheld.

That makes sense, thanks. I was hoping I could just ignore it since taxes were already taken out.

What did they do wrong? I was planning to use a tax service since I'm confused about all this.

They didn't include the unemployment income at all on my return. Apparently the person doing my taxes had never seen a 1099-G before. Make sure whoever does your taxes knows about unemployment benefits.

That's because unemployment isn't technically wages - it's government assistance that happens to be taxable. The system treats it differently than employer payroll.

Still think they should make withholding the default option instead of making people figure it out themselves.

It depends on your total income and filing status. Could be anywhere from 10-22% federal tax, plus you might owe self-employment tax if you did any freelance work.

I didn't do any freelance work, just unemployment and a small amount of W-2 income. Sounds like I need to run the numbers.

Just did this! Found the option under 'Change Tax Withholding' in my account. Wish I had done this months ago.

Better late than never! At least you won't have this problem next year if you're still on benefits.

Might have to try that. I've been calling Washington ESD for two weeks trying to get someone to explain why my 1099-G amount doesn't match what I calculated from my payment history.

That's exactly the kind of thing they helped me with. The discrepancy usually comes from adjustments or overpayments that got deducted from your benefits.

Those pandemic benefits ended in 2021, so if your 1099-G is for 2024, it should only include regular Washington ESD unemployment benefits. The higher amount might be from a combination of regular benefits and any back payments.

That makes sense. I did have some issues with my claim that resulted in back payments being issued.

Really? I had no idea unemployment could affect tax credits. This is getting more complicated than I thought.

Tax law is complex, especially when unemployment is involved. Definitely worth talking to a tax professional if your situation is complicated.

Good point! I did get a job in November and just used the same W-4 settings I had before. Should I have changed something?

You might want to run a paycheck calculator to see if you're having enough taxes withheld from your new job to cover both your work income and the unemployment income taxes.

That would actually be helpful. Many people would probably set up withholding if they saw quarterly statements showing how much they were accumulating in taxable benefits.

Exactly! Instead they leave people to figure it out on their own and then act surprised when everyone's confused about the taxes.

When you're married filing jointly, all your income gets combined including unemployment benefits. So your unemployment income gets added to your spouse's work income for the total tax calculation.

That could actually put us in a higher tax bracket than either of us would be individually. I need to calculate this more carefully.

Thank you for putting it simply! All the tax jargon was making this seem way more complicated than it needed to be.

The hardest part is just remembering that unemployment money isn't 'free' - it's taxable income that you'll need to account for at tax time.

Good to know they can't help with IRS issues, but at least they can clarify the Washington ESD side of things. I might give them a try if I can't figure out my benefit calculation.

sounds like they're pretty thorough about explaining the unemployment benefits part. That's usually where most of the confusion comes from anyway.

Ouch! That's exactly what I was afraid of. At least you got it figured out though. I'm still working on my calculations.

Yeah it stings but it's manageable with a payment plan. Just glad I didn't ignore it and let it get worse.