Washington ESD unemployment compensation taxable - need tax advice

I haven't gotten any 1099-G form yet. When are they supposed to send those out?

Washington ESD typically sends 1099-G forms by January 31st. You can also access it online through your SecureAccess Washington account if you haven't received it in the mail yet.

Oh no, I was afraid of that. I spent most of the money on rent and bills. Any idea roughly how much I might owe on $18k?

It depends on your total income and filing status, but you could be looking at 12-22% federal plus Washington state doesn't have income tax so that helps. Maybe $2,000-4,000 total?

Did you have any trouble setting up the payment plan? I definitely can't pay a lump sum if I owe that much.

nah it was pretty easy online, they let me pay $150/month for like 2 years. just charged a small setup fee

I wish someone had told me about that option! I never saw anything about tax withholding when I was doing my weekly claims online.

It's buried in the settings somewhere on the SecureAccess Washington portal. Not very obvious at all.

Yeah they really should make it more prominent. Most people don't realize unemployment is taxable until tax season hits.

Never heard of Claimyr before. How does it work exactly? I might need to call Washington ESD about other questions too.

Basically they handle the calling for you and get you connected to an actual Washington ESD agent. You don't have to sit on hold for hours or keep getting disconnected. Pretty straightforward to use.

Wish I'd known about this service when I was dealing with my adjudication issues last year. Spent so much time trying to get through to Washington ESD.

Right?! It feels like they're setting people up to fail. I was barely making it on the unemployment payments as it was.

totally agree, they should be required to explain the tax implications when you first file your claim

Oh no, that's exactly what I'm afraid of! Did you have to pay it all at once?

nah you can set up a payment plan with the IRS if you cant pay it all. but definitely file on time even if you cant pay

That's helpful to know. I made about $8,000 from my job before getting laid off, so total income around $26k for the year.

At that income level you should definitely look into available tax credits. Might not be as bad as you're expecting.

Yes, all unemployment insurance benefits are taxable income. Standby, regular UI, doesn't matter. You should probably look into setting up tax withholding on your remaining payments.

crap, how do I do that? I file my weekly claims online but never saw any tax options

Log into your SecureAccess Washington account and look for payment preferences or tax withholding settings. It should be in there somewhere.

I wish someone had told me this when I first filed! Is there a way to change it retroactively?

No, you can't change withholding retroactively. But you can elect to have taxes withheld if you file for unemployment again in the future.

I learned this the hard way too. Washington ESD should really make this more clear when people are filing their initial claims.

Good to know! I was worried about filing if I couldn't pay the full amount.

Thanks, I'll check that out. I've been trying to call Washington ESD for days about my 1099-G status.

How much does that service cost? Seems like something you'd have to pay for.

It's worth it if you really need to talk to someone at Washington ESD. Much easier than spending all day redialing their main number.

That would have been smart advice a year ago! Definitely doing that if I ever have to collect unemployment again.

20-25% seems high but better safe than sorry I guess

That sounds convenient. Did it help you figure out payment options too?

Not really, but it did estimate my refund/amount owed accurately so I could plan ahead.

That's worth looking into. Washington doesn't have state income tax though, so it would just be federal taxes I owe.

Oh right, forgot Washington is one of the no income tax states. That actually saves you quite a bit compared to other states.

I did work for about 4 months after I got my new job, so I had W-2 income too. Probably around $35K total for the year.

With that income level, you're probably looking at owing around 12-22% in federal taxes on the unemployment compensation, depending on your filing status and deductions.

Washington state doesn't have a state income tax, so you only need to worry about federal taxes on your unemployment compensation.

Oh thank god, that's one less thing to worry about. I was panicking thinking I'd owe state taxes too.

Good to know Washington ESD is at least aware it's a problem. How long did it take Claimyr to get you connected?

Maybe 20 minutes total? Way better than the 3+ hours I spent on hold trying to call directly.

Exactly! Like the last thing you're thinking about when you lose your job is tax implications.

This is why I always tell people to have taxes withheld from any kind of government benefits. Better to get a smaller refund than owe a big chunk.

That's actually really smart advice. I'll probably do that since I don't have the money right now.

Just make sure you file by the deadline even if you can't pay. The failure to file penalty is much worse than the failure to pay penalty.

Good to know there are options. I was worried they'd come after me immediately if I couldn't pay.

They're actually pretty reasonable about payment plans as long as you communicate with them and don't just ignore it.

Yes, you can change your withholding election when you file your weekly claims. There should be an option in your online account or you can call Washington ESD to change it.

I tried calling Washington ESD about this but could never get through. Their phone system is impossible.

That's where Claimyr comes in handy - they can get you connected to actually talk to someone about changing your withholding elections.

Should I try to do my own taxes or pay someone to do them? I'm worried I'll mess something up.

If it's just unemployment and W-2 income, you can probably handle it yourself with tax software. But if you're worried, a tax preparer isn't that expensive for a simple return.

Good idea to start saving now. A general rule of thumb is to set aside about 20-25% of your unemployment benefits for taxes, depending on your other income.

I wish they would just automatically withhold taxes like they do with regular paychecks. Having to elect it seems backwards.

Yeah, it definitely feels like something they should warn people about more clearly when you first apply.

At least now you know for next time, hopefully there won't be a next time though!

I'm definitely going to try that. I need to verify some dates on my benefits to make sure I report everything correctly.

Just make sure you have all your questions ready before you call. The agents are helpful but they're still pretty busy.

That's true, I did have taxes withheld from my job for the months I worked. Maybe it won't be as bad as I'm thinking.

Exactly, and if you qualify for any tax credits, that could help reduce what you owe too.

Good point, I'll make sure to keep copies of everything. Better safe than sorry with the IRS.

Yeah, definitely keep your 1099-G and any correspondence from Washington ESD. You never know when you might need it.

Don't panic yet - it really depends on your total income for the year and your filing status. You might not owe as much as you think.

Same boat here. At least we're all figuring this out together!

How much does the 10% withholding reduce your weekly payment? I'm getting $542/week right now.

It would take out about $54 per week for you. So you'd get $488 instead of $542, but no tax surprise at the end of the year.

It shows both the gross amount paid and any federal taxes withheld in separate boxes. Box 1 is total unemployment compensation, Box 4 is federal taxes withheld.

Thanks! Mine shows zero in Box 4 since I didn't have withholding set up.

Yikes, that makes me feel a little better about my situation. Federal taxes only is definitely better.

Absolutely agree. This thread should be required reading for new unemployment claimants.

Definitely wish I'd seen this advice 8 months ago when I started my claim.

I might give them a try. Still have some questions about my claim that I haven't been able to get answered.

Yeah their system makes it so much easier than trying to get through the regular phone lines. The video demo really shows how simple it is.