@Jack B. Whoa.... I live and invest in Washington State and have been a landlord here for over 20 years. I believe you may have misinterpreted what is allowed by the Washington State Residential Landlord-Tenant Act. Seattle has additional laws as well, that favor tenants more than landlords.
Let's clarify a few things first. You say you had a lease (which would have an end date) and you also say you had a month-to-month rental agreement (which would have no definite end date). You raised the rent $400 and was also "cutting them a break". Huh?
The tenants gave proper written legal notice to vacate, 20 days prior to the end of their last rental period right? Therefore they have no further obligations to pay rent for future months if they have indeed vacated the unit by the end of that rental period.
It's a sad reality that some units take more time to turnover and the greater the damage, the more time it will take. You will lose some potential rent revenue, but you can't recover it from the out-going tenant. At least I've never heard of such; I'd be interested in seeing the wording of the lease you say was provided by the Washington State Attorney General's office. Especially since the AG office does not enforce L-T law and their website provides guidance to other resources. See: http://atg.wa.gov/residential-landlord-tenant-reso...
What you can do, however, is account for the damages. Be sure to do this within the time period allowed by law, which may be 14 days or 21 days, depending on when the rental agreement was signed and the terms in the rental agreement.
Depending on the age of the carpet and how long the tenant lived in the unit, what you see as carpet damage may be seen by a judge as ordinary wear and tear or the carpet may have reached the end of its useful life. If the carpet was new when they moved in and the damage has shortened its useful life, then you may be able to charge a percentage of the original value.
Whether to pursue the tenant in small claims court is another matter. Rarely is it worth the time and effort. It also ties up valuable court resources. Instead, complete the final accounting for return of the deposit, mail it in the proper manner, wait for the tenant to respond. If she doesn't pay what is due to you in a timely manner, send her a demand letter, it she doesn't respond to that, then decide if the monetary value is worth a lawsuit. Whether you take it to court or not, you can still send it to collections and see if they have any luck with recovery. If you have a court judgement, it will be easier for the collection agency to recoup some of the money for you.
Best practice is to screen potential tenants well, secure a sufficient security deposit at the beginning of the tenancy, do regular property inspections (at least twice a year, quarterly for some properties), charge for damages as they occur, and enforce the terms of the rental agreement swiftly and fairly. If you wait until the end of tenancy, the security deposit is rarely enough.
[This is based on my experience. No legal advice.]