Washington ESD unemployment tax requirements for self-employed - do I have to pay?

Thanks! So it's optional? I thought I read somewhere that all workers had to pay unemployment taxes.

It's optional for true self-employed individuals. The confusion often comes from misclassified workers who should be employees but are treated as contractors - they should have UI taxes paid by their employer.

OMG yes the phone situation is ridiculous. I tried for days to get answers about my eligibility.

Have you tried using Claimyr? It's a service that helps you get through to Washington ESD agents. Check out claimyr.com - they have a demo video at https://youtu.be/7DieNd3C7zQ that shows how it works. Saved me hours of calling.

Never heard of that but honestly anything is better than sitting on hold forever just to get hung up on.

Do you know what the requirements are exactly? I have an LLC and keep business records.

You need to show proof of business activity, have a state business license if required for your industry, and demonstrate regular income. The application window is usually limited to certain times of the year too.

Your accountant might be thinking of employees. All EMPLOYEES have UI taxes withheld by their employers. Self-employed individuals are different - they can choose to opt in but aren't required to.

Oh that makes more sense. So if I'm a contractor but should really be classified as an employee, then my 'employer' should be paying?

Exactly! That's a common issue - worker misclassification. If you're really an employee being called a contractor, the company should be paying UI taxes on your behalf.

You're right that it's not required, but that also means you can't collect unemployment benefits if your business fails or work dries up. The voluntary coverage gives you that safety net.

yeah i figured that was the tradeoff. just never seemed worth it to me

That's really helpful to know! How much does the voluntary coverage cost?

The premiums are based on your reported income. For me it was around $300-400 per quarter when I was making about $50k annually. The exact rate changes each year.

Did you have any trouble getting approved for benefits when you needed them?

There was definitely more scrutiny since I was self-employed, but because I had the voluntary coverage in place and kept good records, it went smoothly.

You can still apply but there are specific enrollment periods. I believe you can apply within your first year of self-employment or during certain open enrollment windows. You'd need to contact Washington ESD to see if you qualify.

Ugh of course there are enrollment periods. Nothing is ever simple with government stuff.

Is this like a paid service? I'm already tight on money.

It does cost something but honestly worth it if you need answers quickly. Way cheaper than losing income while you wait weeks to get through on your own.

I was skeptical about paying for something like this but actually tried Claimyr after seeing it mentioned here. Got through to Washington ESD same day and resolved my voluntary coverage application issue. Sometimes you gotta pay to save time.

How do you know if you're misclassified? I work for two main clients and they set my schedule and provide some equipment.

There's a whole test Washington ESD uses - things like who controls how/when work is done, who provides tools/materials, whether you can make profit/loss, etc. If you're really an employee, they owe you UI coverage plus other benefits.

Yes this is important! I had to show I was looking for new clients/contracts just like an employee would show they're job searching.

Exactly. Some people think voluntary coverage means automatic benefits but you still have to prove you're unemployed through no fault of your own and actively seeking work.

I mean, that's kind of the trade-off of being self-employed though. More control over your work but less security.

Sure but the system could be better designed to help gig workers and freelancers without making us jump through so many hoops.

That's fair if you have the discipline to actually save that money and not touch it. I know I don't lol

Ha! Yeah it definitely requires self-control. Plus unemployment benefits last longer than most people's emergency funds would.

Good question! You need to have paid premiums for a certain period before you're eligible. I believe it's similar to regular employees - you need a base period of covered wages/payments.

So I couldn't just sign up and then immediately file for benefits?

Correct, there are waiting periods and minimum payment requirements. Otherwise everyone would just sign up when they lost work.

Same here! Wish I had known about this when I first started freelancing.

The lack of information about these programs is really frustrating. Should be better communicated to new business owners.

Great point! It's tempting to report lower income to reduce premiums but that comes back to bite you if you need benefits.

Exactly. And Washington ESD can audit your records if your reported income seems too low compared to your actual business activity.