Do I need to report retention bonus on EDD certification while laid off?
My company is downsizing and I'm getting laid off at the end of the month. They're offering a $5,600 retention bonus if I stay until my final day. I'm planning to apply for unemployment after my last day, but I'm confused about how to handle this bonus when certifying. Do I need to report the retention bonus as income when I apply for benefits? Or is it only regular wages that count? The HR paperwork calls it a 'one-time retention incentive payment' and I don't want to mess up my claim by reporting things incorrectly. Has anyone dealt with retention bonuses while on unemployment?
14 comments
Join the conversation
Isabella Costa
ya gotta report ALL income when applying thats what the form says
0 coins
NeonNebula
•Thanks, but I'm specifically asking about retention bonuses since they're not really the same as regular wages. The EDD forms aren't super clear about different types of payments.
0 coins
Ravi Malhotra
You absolutely need to report the retention bonus. EDD considers this as income for the week in which you receive it. When you certify, there's a question asking if you received any income for the weeks you're certifying - that's where you'd report it as "bonus pay" or "other pay" depending on the certification form options. Failing to report it could result in an overpayment situation later if they discover it, which could lead to penalties. One important distinction - you report income when you RECEIVE it, not when you earn it. So if you get the retention bonus on your final paycheck, you report it for that specific week.
0 coins
Freya Christensen
•This happened to my brother and he didnt report his bonus and EDD found out later and he had to pay everything back plus penalties!! Dont make that mistake!
0 coins
Omar Farouk
Actually, I think retention bonuses are considered severance pay by EDD, not regular wages. When I got laid off in 2023, I had a similar situation. You definitely report it, but if I remember correctly, they don't reduce your weekly benefit amount dollar-for-dollar like with regular wages. EDD has weird rules about different types of payments. Anyone know for sure?
0 coins
Chloe Davis
•This is incorrect. Retention bonuses are NOT the same as severance pay. Severance is generally paid after employment ends as compensation for job loss. Retention bonuses are earned by staying through a specified date. EDD treats them as wages/income for the week received and they will reduce or eliminate your benefit payment for that week depending on the amount. Make sure you select the correct income type when certifying - usually "bonus pay" or sometimes "other pay."
0 coins
AstroAlpha
I BEEN STUCK IN A SIMILAR SITUATION!!! My last company gave me a "stay bonus" of $3,000 and I reported it when I certified that week and literally got ZERO benefits that week because the bonus was more than my weekly benefit amount. The next week was normal tho. So yeah u gotta report it but it only affects the 1 week
0 coins
NeonNebula
•This is super helpful, thanks for sharing your experience! So it sounds like I should expect to not get benefits for the week I receive the bonus, but it won't affect future weeks?
0 coins
Diego Chavez
I just went thru this exact thing when my tech company laid everyone off. You 100% need to report retention bonus on your certification for the week you RECEIVE it (not when they promised it). The EDD system will reduce your benefits that week based on the bonus amount. If your weekly benefit amount is $450 and your bonus is $5,600, you won't receive benefits for that week, but it doesn't affect future weeks. Also, heads up that EDD is almost impossible to reach if you have questions about this. I spent 3 weeks trying to get through on the phone about my situation. Eventually I used Claimyr (claimyr.com) to connect with an EDD rep about my retention bonus question - they have a video showing how it works: https://youtu.be/JmuwXR7HA10?si=TSwYbu_GOwYzt9km The EDD rep confirmed that retention bonuses count as income for the week received. They will cross-check with your employer's reporting too, so don't skip reporting it.
0 coins
Ravi Malhotra
•Great advice. And you're right about reporting it for the week received, not when earned. This is a key distinction many people miss with bonuses.
0 coins
Freya Christensen
what about taxes?? do they take taxes out of the bonus? i think retention pay is taxed higher than regular income right??
0 coins
Chloe Davis
•The tax question is separate from the unemployment reporting question. But yes, bonuses are typically subject to a flat 22% federal withholding rate (sometimes called supplemental wage withholding), which might be higher than your normal tax rate. This doesn't change how you report it to EDD though.
0 coins
NeonNebula
Thanks everyone for all the helpful info! Sounds like I should definitely report the retention bonus for the week I actually receive it, and expect that I probably won't get benefits for that specific week since the bonus is larger than my weekly benefit would be. At least it won't affect future weeks. I'll make sure to select "bonus pay" on the certification form too.
0 coins
Diego Chavez
•Exactly right! And don't worry if your first payment is delayed because of this - that's normal when there's a large bonus payment reported in the beginning of a claim. The system sometimes flags it for review.
0 coins