Which of the following payments are taxable for Washington ESD unemployment - confused about federal tax rules

All unemployment compensation is generally taxable income for federal tax purposes, including regular UI benefits from Washington ESD. The state should have sent you a 1099-G form showing the total amount you received. You can choose to have federal taxes withheld from your weekly claims when you file them.

I learned this the hard way last year - didn't have taxes withheld and ended up owing like $2000. Make sure you set aside money if you didn't choose the withholding option when filing your weekly claims!

If you're having trouble getting through to Washington ESD about tax withholding options or need to update your preferences, I found this service called Claimyr that actually gets you connected to ESD agents. They have a website at claimyr.com and there's a demo video at https://youtu.be/7DieNd3C7zQ that shows how it works. I used it when I couldn't get through their regular phone lines to ask about my 1099-G form.

wait so if I got like $8000 total in unemployment last year that's ALL taxable?? I thought there was some kind of exemption or something

The confusion might be coming from the fact that unemployment benefits aren't subject to Social Security or Medicare taxes, but they are definitely subject to federal income tax. It's treated just like wages for income tax purposes.

Pro tip: when you're filing your weekly claims on the Washington ESD website, there's a section where you can choose to have 10% withheld for federal taxes. I wish I had done this from the beginning instead of scrambling to pay estimated taxes quarterly.

I'm a tax preparer and I see this confusion every year. ALL unemployment compensation is taxable - regular state UI, federal extensions when they exist, everything. The only time it wasn't was that special COVID provision in 2020. Make sure you report the full amount from your 1099-G.

This whole tax situation is so frustrating. You're already struggling financially and then they hit you with taxes on the money that's supposed to help you survive. The system is ridiculous.

Just to add another data point - I used that Claimyr service someone mentioned earlier when I needed to talk to ESD about my 1099-G being incorrect. It actually worked and I got through to someone who could fix the issue. Way better than spending hours on hold.

The 1099-G form from Washington ESD will show your total benefits in box 1, and any federal taxes withheld in box 4. If box 4 is empty, that means no taxes were withheld and you'll need to pay taxes on the full amount when you file your return.

wait can someone clarify - is there a difference between regular unemployment and other types? Like if you were on standby status or something?

This thread is really helpful. I had no idea about the tax implications when I started collecting. Does anyone know if Washington state taxes unemployment benefits too?

I made the mistake of not withholding taxes from my unemployment last year and ended up owing $1800. This year I immediately set up the 10% withholding when I had to file for benefits again. Learn from my mistake!

For anyone still confused about this - the IRS has a specific page about unemployment compensation being taxable. It's been this way for years, with that one exception in 2020. Don't let anyone tell you unemployment isn't taxable income.

Just want to mention that if you're getting unemployment and also have a part-time job, both sources of income are taxable. Don't forget to account for your work income too when planning for taxes.

I tried using that Claimyr thing someone mentioned and it actually got me through to ESD when I needed to ask about tax withholding. Worth checking out if you can't get through their regular lines. The demo video explained it pretty well.

Bottom line for anyone reading this - unemployment benefits are taxable income, period. Plan accordingly by either having taxes withheld or setting money aside. Don't get caught off guard like so many of us did!