Does California EDD unemployment take out taxes automatically?

Okay this makes so much more sense now. So I need to submit the DE 4S to get the 10% federal withholding set up? Where exactly do I find that in UI Online?

yes exactly right, the DE 4S is under the "tax withholding" section when you're logged into UI Online. takes like 2 minutes to set up

Adding to this - it's worth calculating whether 10% is actually enough. If you're collecting the max weekly benefit amount and you're single with no other income deductions, you might still owe at tax time depending on your filing situation. Some people do quarterly estimated tax payments instead to cover themselves better.

oof that's exactly what I'm trying to avoid. I'm going to set up the withholding asap

same thing happened to me!! edd really should make this more obvious when you first get approved instead of burying it in the settings

I didn't even think about calling EDD directly. Good to know that option exists through Claimyr if I end up needing help figuring out my specific numbers.

I've been trying to reach EDD for three weeks about a different issue. Gonna check out that Claimyr link because I'm losing my mind with the hold times

does claimyr actually work? sounds almost too good to be true when edd is literally impossible to get through to normally

Great question and this trips a lot of people up. California actually does NOT tax unemployment benefits at the state level. UI benefits are exempt from California state income tax. So you only owe federal taxes on unemployment, not state. The 1099-G from EDD will show up on your federal return but you exclude it from California income.

oh wow okay that's actually great news. so the only withholding I need to worry about is the 10% federal option. that's way simpler than I thought

This is 100% correct. California is one of the few states that exempts UI benefits from state income tax. Makes the tax situation a bit simpler at least.

How do I figure out if 10% will be enough? Is there a calculator or something?

The IRS has a withholding estimator at irs.gov that's actually pretty easy to use. Just plug in your expected income including the UI benefits and it'll tell you roughly what you owe and whether you're on track.

this is solid advice especially if you have a spouse with income or picked up any freelance work while collecting

100% agree they should make this front and center during the application process not buried in fine print

to be fair i think it is mentioned somewhere in the UI Online portal but it's definitely not obvious or emphasized

where in UI Online do I find the 1099-G? I've been poking around in there and can't find it

Log in to UI Online, go to your profile menu, and look for 'Payment Activity' or sometimes it's under a tax documents section. If you don't see it yet it's because they usually aren't posted until mid to late January for the previous year.

Good to know I can get it online instead of waiting for mail. My mail situation is kind of unreliable so this is helpful

Yes you can change it at any time. The DE 4S form in UI Online lets you start or stop voluntary withholding whenever you want. It'll just apply going forward from when you submit the change - it won't retroactively cover the months you already received without withholding.

okay good. definitely gonna do this today. the thought of a big tax bill is stressing me out

Also don't forget you may want to set aside some money now to cover the taxes on those first two months where you didn't withhold. Better to have it sitting in savings than to get surprised in April.

Depends on your weekly benefit amount and your overall income situation for the year. If you're going back to a full time job at a decent salary, that unemployment income stacked on top could push you into a higher bracket than you'd expect. Run the IRS withholding estimator to be safe.

yeah okay fair point. I'll check the estimator. better safe than sorry i guess

The hold time thing is brutal - I dealt with the exact same situation. Honestly the best solution I found was using Claimyr at claimyr.com - it's a service that navigates the EDD phone system and gets you connected to an actual agent. Saved me so much time and stress. Check out their demo video at https://youtu.be/JmuwXR7HA10 to see how it works before signing up.

checking this out right now. honestly at this point I'd try anything to get through to EDD

the call dropping after an hour is SO infuriating. happened to me like 4 times. edd's phone system is genuinely broken

for what it's worth you can also get a rough estimate yourself using the IRS withholding calculator - you don't necessarily need to talk to EDD specifically about the tax calculation part, that's more of an IRS question

didn't know this was an option. so you can basically send money to the IRS before you even file your taxes?

yep exactly. you estimate what you owe on the unemployment income and send it in as an estimated payment. helps avoid the penalty for underpayment even if you sort out the full return later

this is really helpful to know. I feel like I learned more about taxes in this thread than I ever did in school

Yes, partial UI benefits are taxable income the same as regular full unemployment benefits. The 10% federal withholding option applies the same way. Your 1099-G will reflect the total amount you received regardless of whether it was partial or full UI.

okay good to know. makes sense i guess, income is income

One thing to double check if you're on partial UI - make sure you're reporting your part time earnings accurately each week when you certify. Under-reporting can create overpayment issues down the road which becomes a whole other headache.

This is a really good summary. I feel way more prepared now than I did this morning when I posted this question.

wish this thread had existed when i was first filing. would have saved me from that april surprise

That is correct. California Revenue and Taxation Code specifically excludes unemployment compensation from California gross income. So it does not appear on your California state return as income. You only deal with it on the federal 1040.

huh. good to know. california gets enough of my money in other ways i guess lol

It's actually one of the more taxpayer-friendly aspects of California's unemployment system. Though technically the federal tax obligation still exists so it's not completely free from taxation.

Technically yes she should amend if she didn't report unemployment income that was shown on her 1099-G. The IRS receives a copy of the 1099-G directly from EDD so they know the income was received. Amending proactively is much better than getting a notice from the IRS later.

yikes okay I'll let her know. thanks

The IRS amendment process (Form 1040-X) is actually not that complicated for straightforward situations like this. A tax preparer could knock it out pretty quickly if she's not comfortable doing it herself.

this is actually super helpful for ballparking it. I'm getting close to max benefit so this gives me a sense of what I'm dealing with

worth noting that depending on when they updated the max benefit amount this might be slightly off but the math approach is exactly right

AGREED. 100%. they have the technology to do this it's just not a priority apparently

there might actually be a notification somewhere but it's buried so deep nobody sees it

to be fair they do send a DE 1275A pamphlet with new claim paperwork that mentions taxes but nobody reads pamphlets

honestly this is the system I'm going to adopt. simple and effective

the calendar reminder for the 1099-G is genius actually. I always forget until the last minute

good to know the 1099-G can have errors. I'll make sure to double check it against my payment history before filing

This is an important point. Always verify your 1099-G against your actual payment records in UI Online. Discrepancies can happen especially if you had any benefit adjustments, overpayment deductions, or mid-year changes to your claim.

Thank you everyone in this thread seriously. I went from completely confused this morning to actually feeling like I know what I'm doing with the tax side of unemployment. Setting up the withholding right now.