EDD SDI overpayment from old UI debt - will they take my tax refund while I'm making payments?

Yes, you should receive a 1099-G form from EDD for your disability benefits by the end of January 2025. This form will show the TOTAL amount of taxable benefits paid to you during 2024, even if some of that money was redirected to pay off your UI overpayment. The form should be available in your SDI Online account under 'Forms and Certificates' if they don't mail it to you. As for your tax refund, unfortunately, yes - they can still take your tax refund even if you're making payments. EDD reports delinquent overpayments to the Treasury Offset Program which allows them to intercept tax refunds. The fact that you're making payments doesn't automatically stop this process, though you might be able to request they remove you from offset status since you have a payment plan.

same thing happened to my cousin last yr. edd took his refund even tho he was making payments every month. TOTAL BS!!!! system is rigged against us 😡

I had a similar situation but with PFL instead of SDI (they're both disability programs but for different purposes - Paid Family Leave vs State Disability Insurance). You need to call EDD and specifically request to be removed from the Treasury Offset Program (TOP). Explain that you have a payment plan and are making regular payments. Also, make sure you're tracking all those disability payments that went toward your UI debt - they count as "paid" for tax purposes even though you never saw the money. The 1099-G should reflect this, but EDD makes mistakes sometimes. I spent WEEKS trying to get through to someone at EDD about my situation. I finally used Claimyr (claimyr.com) to get through to a live agent without waiting for hours. They have a video showing how it works: https://youtu.be/1X-mEsLtbmQ?si=1hcSq3KFtCr4oAmd. Saved me so much frustration and I finally got it resolved.

Just to clarify something important here - there's a difference between VOLUNTARY repayments you're making on your overpayment plan versus INVOLUNTARY collections (like them taking your disability payments or tax refunds). For tax purposes: 1. The full amount of SDI benefits count as income in the year they were PAID OUT (even if they went straight to your debt) 2. You may be able to claim a deduction for repaying the UI overpayment, but it gets complicated You should really talk to a tax professional about this specific situation because there are special rules for repaying benefits from a prior year. Some people qualify for a special tax credit rather than a deduction, depending on the amount. Regarding stopping the tax offset - yes, you need to call EDD Collections and specifically request to be removed from TOP. Have your payment history ready to prove you're making good on your payment plan.

wait im confused... are you talking about regular disability or paid family leave for your son? those are different programs. if its PFL that money isnt taxable the same way i think?? but regular SDI is taxable like unemployment

I went through this EXACT situation last year. Here's what happened: 1. Yes, EDD will send you a 1099-G for the FULL amount of disability benefits they determined you were eligible for, even though they diverted some to your overpayment 2. Yes, they WILL still take your tax refund if you're in the Treasury Offset Program, EVEN IF you're making payments I had to call the EDD collections division directly (not the regular disability line) at 1-800-676-5737 and speak to a collections specialist. I had to prove I made 6 consecutive monthly payments on my plan, then they agreed to remove me from TOP. It took about 45 days to process after that request. Don't waste time calling the regular EDD lines - they can't help with this specific issue. You NEED to talk to collections division specifically about removing you from TOP.

my sister just went thru something like this but with disability for her pregnancy? i think the most important thing is to keep really detailed records of everything. like when u called, who u talked to, confirmation numbers, etc. EDD made so many mistakes with her claim she had to appeal like 3 times and having good records was the only thing that saved her. good luck man the system is so messed up

I'm in a similar boat but haven't been as proactive about setting up payments. Reading through these responses, it sounds like having a documented payment plan is key to getting removed from the Treasury Offset Program. Quick question for those who've been through this - when you call the collections division at 1-800-676-5737, do they require you to set up automatic payments or can you keep making manual payments? I'm worried about giving them direct access to my bank account given all the horror stories I've heard about EDD taking more than they're supposed to. Also, has anyone had success getting their tax refund back AFTER it was intercepted? Or is it pretty much gone forever once they take it?

I went through something very similar about 6 months ago. One thing that really helped me was requesting a "financial hardship consideration" when I called the collections division. If you can show that intercepting your tax refund would cause significant financial hardship (like if you're counting on that refund for essential expenses), they sometimes have more flexibility in working with you. Also, make sure you get everything in writing! When they agree to remove you from TOP, ask them to send you a confirmation letter or email. I learned this the hard way - they told me over the phone I was removed but it took another month because there was no documentation of the request. One more tip: if you're expecting a large refund this year, consider adjusting your withholdings for next year so you don't give the government an interest-free loan. That way even if something goes wrong with the TOP removal, you won't have as much at risk. The whole process is frustrating but it IS possible to get resolved if you stay persistent and document everything.