Washington ESD - which federal tax provides for unemployment benefits?

Oh interesting, so as an employee I don't actually pay into the unemployment system directly through federal taxes?

Correct! FUTA is paid entirely by employers. Some states also have their own unemployment taxes that employers pay, but the federal portion comes from FUTA.

So Washington state must have an approved program since we have Washington ESD benefits?

Yes exactly. Washington ESD administers an approved state unemployment program, so employers here get that FUTA credit.

Have you tried using Claimyr? It's a service that helps you get through to Washington ESD agents. I used it last month when I couldn't reach anyone about my 1099-G form. Check out claimyr.com - they even have a video demo at https://youtu.be/7DieNd3C7zQ showing how it works.

Never heard of that before. Does it actually work or is it just another scam?

It's legit. They basically call repeatedly until they get you connected to a real person at Washington ESD. Saved me hours of redial attempts.

So my Washington ESD benefits came from a combination of federal FUTA taxes and Washington state employer taxes?

Yes, and the specific mix depends on your benefit type and economic conditions. Regular UI is mostly state-funded, but federal funds help during high unemployment periods.

Yeah I'm dealing with that now. Washington ESD sent me a 1099-G showing all the benefits I received in 2024.

That's correct. Unemployment benefits are considered taxable income for federal tax purposes, even though they're funded by employer taxes.

I know it seems circular, but it makes sense when you think about it. The employer taxes fund the insurance program, but the benefits you receive count as income to you personally.

i guess that makes sense. still feels like double taxation though

Exactly right! FUTA provides the federal funding component, while Washington state has its own employer taxes that fund most of the regular UI benefits you'd receive from Washington ESD.

And don't forget that during economic downturns, Congress sometimes appropriates additional federal funds for extended benefits programs.

That's really helpful context! So when I was working, my employer was paying these taxes on my behalf without me even knowing?

Correct. It's part of the total cost of employing someone, but it doesn't come out of your paycheck like Social Security or Medicare taxes do.

Awesome! I'm glad it worked for you too. It's such a relief when you can actually talk to a human at Washington ESD.

might have to try this myself. been trying to call about my overpayment notice for days

Thanks for all the explanations everyone! This makes much more sense now. I feel like I understand the system better.

Interesting historical context. It's amazing how the system has adapted over time to handle different economic crises.

Makes sense that it would need to evolve. The economy and job market are so different now than in the 1930s.

That's true, though states have reserve funds and can borrow from the federal government if needed. Washington typically maintains healthy trust fund levels.

Right, and employers who don't pay their unemployment taxes face penalties and interest, plus their employees could potentially lose benefit eligibility.

No, self-employment tax only covers Social Security and Medicare. Self-employed individuals traditionally haven't been eligible for unemployment benefits, though some states have started programs for independent contractors.

oh that explains why i wasnt eligible when my freelance work dried up a few years ago

Happy to help! Understanding how these programs are funded can help you navigate the system better if you ever need benefits again.

And remember, if you ever need to contact Washington ESD about anything, services like Claimyr can save you a lot of frustration trying to get through on the phone.

Thanks for mentioning that. We're definitely keeping an eye on that in our payroll department. Could significantly impact employer costs if it's not extended.

Wow, that would be a huge increase! Would that affect benefit levels or just the funding mechanism?

It would primarily affect funding. Benefit levels are determined by state formulas based on your past wages and work history.

ok you've convinced me. going to try it for my overpayment issue tomorrow

It really does work well. I've recommended it to several people now and everyone has had good experiences getting through to Washington ESD.