Do you pay taxes on California EDD unemployment benefits?

Wait so California doesn't tax it at all? That's actually a relief. But I'm still nervous about the federal part - how do I know how much I'll owe?

this is correct. learned this the hard way my first time on unemployment years ago, got a surprise tax bill in april and had absolutely no money left. california is actually one of the more claimant-friendly states on this specific issue

Exactly right. To add to this - California EDD will send you a Form 1099-G at the end of the year showing the total unemployment compensation you received. You use that when filing your federal taxes. The form usually arrives in January for the prior tax year.

Right?? The California EDD website has so much information but I couldn't find a clear answer about the tax situation anywhere obvious

its honestly buried in the fine print when you first file. they do mention it somewhere but easy to miss

Oh wow I didn't know you could do that through UI Online. That's exactly what I need. Is it under account settings or somewhere else?

It's usually under the 'Payment Options' section in UI Online. Once you select voluntary withholding, California EDD will deduct 10% federal income tax from each benefit payment before depositing it. You can change or stop it anytime.

I tried setting this up last month and honestly had trouble navigating the UI Online interface. Eventually had to call California EDD to have them walk me through it. Getting through by phone was the real challenge though - took me forever until someone recommended Claimyr (claimyr.com). It connects you to an actual EDD rep without the endless hold loops. There's even a demo video at https://youtu.be/JmuwXR7HA10 showing how it works. Got through in like 20 minutes and the agent helped me set up my withholding no problem.

seconding the withholding option, best financial decision i made when i was on UI. small hit to each payment but WAY better than owing a lump sum

This breakdown is super helpful thank you. What do you mean by quarterly estimated payments? Is that something I need to do right now?

If you expect to owe more than $1,000 in federal taxes total for the year and nothing is being withheld, yes the IRS prefers you pay quarterly rather than all at once in April. Estimated payment deadlines are typically April 15, June 15, September 15, and January 15. But honestly for most unemployment claimants the 10% voluntary withholding through California EDD covers it - estimated payments are more of a concern if you have other freelance or self-employment income too.

the quarterly payment thing confused me so much when my accountant mentioned it. felt like the IRS was piling on while i was already struggling

Nope, it's all treated the same for tax purposes regardless of when you actually received it. The 1099-G from California EDD will just show the total amount paid to you in that calendar year. A lump sum from adjudication backpay counts as income in the year you received it, not the weeks it was supposed to cover.

ok good to know. i was worried the IRS would see a big deposit and flag it or something

Same rules apply. The California EDD 1099-G captures everything - regular weekly payments and back payments are lumped together in the total. It's straightforward from a tax filing standpoint even if getting that backpay was anything but straightforward lol

This is exactly what I was afraid of. Definitely setting up withholding today after reading this thread

oof yeah that sounds awful. $800 surprise bill when youre already broke is such a gut punch

It was honestly one of the most stressful things. And the California EDD phone line was impossible to get through to confirm my 1099-G numbers when I was disputing something on my tax return. Eventually used Claimyr to actually reach someone - claimyr.com - and got my issue sorted. Way easier than redialing for hours.

You're actually right about that. If your total income including UI benefits falls below the standard deduction ($14,600 for single filers in 2024), you technically wouldn't owe federal income tax. But many people on unemployment also worked part of the year, so their combined income exceeds that threshold. It's very situation-dependent which is why setting up the 10% withholding as a precaution is smart regardless.

ohh ok so it depends on the whole year picture not just the unemployment amount. that makes sense

yeah this tripped me up too. i only got about 10 weeks of UI but i had worked like 8 months that year so my total income was still high enough that the unemployment portion added a noticeable amount to what i owed

Good call I should double check my address in UI Online right now actually

Yes do it! You can also access your 1099-G digitally through UI Online if you've opted into paperless communications, which I'd recommend. Way more reliable than mail.

the digital option is great. mine was available in UI Online like a week before the paper copy even arrived

I get the frustration but at least knowing upfront means you can plan for it. The voluntary withholding option is genuinely helpful once you know it exists

yeah i set it up after getting hit the first time. just wish california EDD made it more obvious when you first apply instead of burying it

Completely valid frustration. The 10% withholding does soften the blow though - it essentially mimics what your employer would have withheld, just at a baseline rate

How do you check what you actually received? Is there a payment history in UI Online?

Yes! In UI Online there's a payment history section that shows every benefit payment made to your account with dates and amounts. Add them up and compare to what your 1099-G says. Usually they match but if you had any weird situations like adjustments or overpayment deductions it's worth checking.

This is good advice. Especially for anyone who had an overpayment offset - if California EDD deducted money from your payments to recover an overpayment, the 1099-G shows what was paid to you before the offset, not what you actually received in your bank account. That can cause confusion at tax time.

Really important point. Box 4 on the 1099-G is specifically for federal income tax withheld. If you elected the 10% California EDD withholding, that should appear there and reduces what you owe when you file.

I'm going to screenshot this whole thread for when I do my taxes lol

haha honestly not a bad idea. taxes while on unemployment have way more moving parts than i expected

oh this is such a good point. when i got rehired i completely forgot that my UI payments were sitting there as untaxed income and my new W-4 didn't account for it at all. ended up owing a few hundred extra

Yep it's easy to forget once you're back to normal life with regular paychecks. A quick adjustment to your W-4 claiming fewer allowances or adding a flat extra amount per paycheck can prevent that surprise

is there a way to calculate this without an accountant? like some kind of tool

four disconnects in one day sounds like my experience exactly. might have to check this out

honestly after that many failed attempts anything that works feels like magic. the agent i reached was actually super helpful about my withholding setup too

does it work for like general questions or just specific issues? i have a random question about how my 1099-G was calculated

I'm not doing any side work right now but good to know for future reference. I had no idea the weekly certification and taxes could interact like that

Yeah the weekly certification process is where you report any earnings for that week which reduces your UI benefit for those weeks. But from a tax standpoint everything counts - reduced UI payment plus the wages earned, all goes on your federal return

this is where it gets complicated fast. definitely worth using a tax professional or at minimum free file software if your situation has any wrinkles beyond just straight unemployment income

same honestly. the peace of mind is worth more than the 10%

exactly and if you end up overpaying you just get a refund when you file. worst case scenario you get money back

During 2020 there was a one-time federal exclusion that allowed up to $10,200 of unemployment to be excluded from federal income for people under certain income limits. That was a COVID-era provision and it absolutely did NOT carry over - unemployment is fully federally taxable again as of 2021 and beyond. So for your 2024 or 2025 California EDD claim, standard rules apply: federally taxable, California state exempt.

ok good to know. i wasn't sure if that was still a thing or not. so back to regular rules

Yes, full federal taxation resumed after that one-year exception. Worth noting because some people who only went on unemployment during COVID think it's always been non-taxable federally, which causes confusion when they file on California EDD again now

Great news! That 10% withholding is going to save you a lot of stress come tax season. Good luck with the rest of your claim.

Smart move. And yes, the California state exemption is legitimately one of the better aspects of collecting UI here. Makes the overall tax hit much more manageable than it would be otherwise.

glad it worked out! this is exactly the kind of stuff i wish someone had told me before my first time on unemployment