Washington ESD unemployment tax break refund - how much will I get back?

Oh darn, so if I got unemployment in 2023 there's no tax break for that?

Correct, the unemployment tax exclusion was only for 2020. Regular unemployment benefits from Washington ESD are still taxable income for other years.

Yes, if you filed your 2020 taxes before the law changed, the IRS automatically recalculated and sent refunds to eligible people. But again, this was only for 2020 unemployment benefits.

That makes sense. I wish they had something like that for recent years too.

You can request federal tax withholding when you file your weekly claims with Washington ESD. It's usually 10% but you can also choose to pay estimated quarterly taxes instead.

I didn't know you could request withholding! That would have saved me from owing money at tax time.

Yeah, when you're filing through the Washington ESD website, there's an option to have 10% withheld for federal taxes. State of Washington doesn't have income tax so no state withholding needed.

Oh man, I had the same problem! I actually found this service called Claimyr that helped me get through to Washington ESD agents. You can check it out at claimyr.com - they have a demo video at https://youtu.be/7DieNd3C7zQ that shows how it works. Made it so much easier to reach someone about my tax forms.

Really? How does that work exactly? I'm always skeptical of third-party services.

I was skeptical too but it actually just helps you get through the phone system more efficiently. Saved me hours of trying to call Washington ESD directly.

Thanks for the clear explanation. So basically I should expect to pay federal taxes on any unemployment I receive going forward?

Exactly. Always plan to set aside money for taxes or request withholding when you file your weekly claims with Washington ESD.

tell me about it, and then trying to get answers from washington esd is impossible

The Washington ESD website actually has a pretty good FAQ section about taxes and unemployment benefits. Might be worth checking before calling.

They're required to send 1099-G forms by January 31st. If you haven't received yours, you can download it from your Washington ESD account online or request a duplicate.

Perfect, I'll log into my account and check. Thanks!

Yeah the online account is usually faster than waiting for the mail. Though getting into the account can be tricky sometimes with all the security questions.

Correct - only up to $10,200 of 2020 unemployment benefits were excludable from federal taxes, and only if your AGI was under $150,000. Any unemployment from other years is fully taxable.

That's so weird that it was only for one year. I guess it was because of the pandemic?

Exactly, it was part of the COVID relief efforts since so many people were unemployed through no fault of their own in 2020.

Job search expenses used to be deductible as miscellaneous itemized deductions, but that was eliminated in 2018. There might be some education credits if you're taking classes to improve job skills.

Bummer about the job search expenses. Good to know about education credits though.

Same thing happened to me! Now I always request the 10% withholding when I file my weekly claims.

That's a hard lesson but good advice. The 10% withholding usually covers most of what you'll owe, though everyone's situation is different.

Yeah, it's better to get a small refund than owe a big chunk at tax time.

Severance pay is taxable income just like regular wages, but it's separate from your unemployment benefits for tax purposes. Both will show up on different tax documents.

ok so i'll get a w2 for severance and 1099-g for unemployment?

Exactly! Severance shows up on your W-2 with your regular wages, unemployment benefits show up on the 1099-G from Washington ESD.

It's possible - unemployment benefits are added to your other income, so if the total pushes you over a bracket threshold, the portion above that threshold gets taxed at the higher rate. But remember, only the income above the threshold gets the higher rate, not all your income.

That makes sense. I was worried all my income would suddenly be taxed at a higher rate.

It counts for the tax year when you actually received the payment, so January 2024 payment would be on your 2024 taxes, not 2023.

Good to know, thanks! I was confused about that timing.

I totally get the frustration with calling Washington ESD. That's actually why I ended up using Claimyr - it cuts through all the phone system hassle and gets you to an actual person who can answer tax questions or help with forms.

How much does something like that cost? I'm already tight on money from being unemployed.

I don't want to quote exact pricing since it might change, but for me it was worth it to avoid spending entire days trying to get through to Washington ESD. Check out their site at claimyr.com to see current options.

Great advice! Your Washington ESD online account keeps track of all payments, but it's smart to keep your own records too.

Exactly, I learned that the hard way when I couldn't remember if a payment was from December or January.

Generally, if you expect to owe $1,000 or more in taxes and didn't have enough withheld, you should make quarterly payments to avoid penalties. This applies whether your income is from work or unemployment benefits.

Makes sense. I'll probably just request withholding next time to keep it simple.

I feel the same way! It's like being kicked when you're already down.

I understand the frustration, but unemployment benefits are considered income replacement, which is why they're taxed like other income. The 2020 exception was unusual.

I get the logic, but it still stings when you're already dealing with job loss stress.

Thanks everyone for all the helpful info! Sounds like I need to just accept that there's no refund coming and plan better for next year if needed.

Exactly! And don't hesitate to consult a tax professional if you have a complex situation with unemployment and other income sources.