Does getting California EDD unemployment affect your tax return?

Wait so California doesn't tax it at all? That's actually a relief. But I'm still worried about the federal side. I made maybe $18k from my job before I got laid off and then collected benefits the rest of the year. Is that going to push me into a higher bracket?

This is correct. The 1099-G is what you're looking for. Make sure your mailing address is updated with EDD before year end so it goes to the right place. You can also access it electronically through your UI Online account.

yeah california not taxing it is a big deal, i was so relieved when i found that out last year

Is there any way to set up withholding now even though I'm still currently collecting? Or is it too late for this year?

You can actually change your withholding election at any time during your claim. Log into UI Online and look for the tax withholding option in your account settings. It won't fix what's already been paid out this year but it'll apply going forward for any remaining payments.

same thing happened to me two years ago, owed like $800 at tax time and was so not prepared for it lol

Ugh I've had the same experience trying to call EDD. Might look into that. Did the agent actually know about the tax stuff or did they just handle claim stuff?

The agent I talked to was able to confirm the amounts on my 1099-G and helped me update my withholding election. For deeper tax questions they'll tell you to consult a tax professional, but for EDD-specific stuff they were helpful.

I tried calling EDD probably 40 times over 3 weeks, never got through once. Wish I had known about something like that earlier

claimyr sounds sketchy to me idk, giving your info to some third party service just to call the government?

I get the skepticism but it worked fine for me. They're just facilitating the call, you're still talking directly to an actual EDD agent at the end of it.

Okay this is really helpful framing. I'll try that IRS calculator. I just want to know what I'm dealing with before April.

the IRS has a free tool for this?? I never knew that, that's actually super useful

Yes the IRS withholding estimator is actually pretty decent. You'll need your most recent pay stubs and a sense of how much UI you've collected so far to use it accurately.

You are wrong about this one - California specifically exempts unemployment compensation from state income tax. It's unusual because most states do tax it. Federal government taxes it though, which is what trips people up.

oh wow TIL, i've been stressing about state taxes on my benefits for nothing lol

Yep California Revenue and Taxation Code specifically excludes unemployment compensation from gross income for state purposes. Pretty significant benefit for California claimants.

Good call, I actually did move a few months ago. Just logged in and updated my address, thanks for that tip.

this happened to my brother in law, was a whole mess trying to sort out. definitely update your address early

At $26k total income as a single filer you'd be in the 12% federal bracket for most of that income after the standard deduction ($14,600 for single filers in 2024). You likely won't owe a massive amount but without knowing your withholding history it's hard to say exactly. FreeTaxUSA or IRS Free File are genuinely free options that walk you through it step by step.

okay 12% doesn't sound too terrible. I was imagining like owing thousands. I'll check out those free filing options thanks

FreeTaxUSA is really good, I've used it for the past three years. It handles the 1099-G perfectly and walks you through the whole thing.

Not really differently - the same rules apply either way. Whatever you collected in UI benefits gets added to your other income for the year and the combined total determines your tax situation. The 1099-G will show whatever you received in that calendar year regardless of how long your claim ran.

ok makes sense, i only had benefits for like 6 weeks so probably not a huge deal for me then

I did actually go back to part time work for a couple months while still claiming. So I should expect to see both my partial wages AND the reduced UI benefits on my 1099-G?

Your wages will come from your employer's W-2, and your UI benefits (including the partial benefit amounts you received while working part time) will be on the 1099-G from EDD. Two separate documents but both feed into your federal return.

oh man this is getting complicated fast. I had partial benefits for a while too

The information is technically there on the EDD website but you're right that it's not front and center when you're just trying to get through the filing process. A lot of people don't find out until someone else tells them.

exactly, it should be like the first screen you see when you set up your claim not buried in an FAQ somewhere

100% agree, I was shocked when I found out my benefits were taxable, felt like I got tricked somehow even though technically EDD did disclose it

Job search expenses used to be deductible as miscellaneous itemized deductions at the federal level but that deduction was eliminated by the Tax Cuts and Jobs Act back in 2017 and hasn't been reinstated. So unfortunately no, you can't deduct those expenses on your federal return currently. Some states have their own rules but California follows the federal treatment on this.

ugh of course. was worth asking I guess

It's frustrating but yeah that deduction is gone for now. Focus on making sure you're claiming all the credits you might qualify for instead - things like the Earned Income Tax Credit if your income is in the qualifying range.

This is really reassuring, thank you. The payment plan option especially helps knowing that if I do owe something I'm not just stuck with a giant bill I can't pay.

how do you even dispute a 1099-G amount? Like what if EDD made an error?

You'd need to contact EDD directly and request a corrected 1099-G. They should have records of every payment made to you. It's a bit of a process but definitely worth doing if the numbers don't match your own records of what you received.

Honestly might try this, I want to verify my amounts before the 1099-G arrives so I'm not caught off guard

Does this actually work or is it one of those things that sounds good but doesn't?

Worked for me, I was skeptical too but I got a callback within a couple hours and talked to a real EDD agent. Way better than trying to call on my own.

This is actually a nuanced tax question. Generally the 1099-G shows what was paid to you. If you repaid an overpayment in the same tax year it was received, you might be able to net it. But if you received it in one year and repaid it in a different tax year, the IRS has specific rules called the 'claim of right' doctrine that may apply. This is genuinely a situation where talking to a tax professional is worth it because the rules are complicated.

ughhh okay. I received benefits in one year and am repaying the overpayment this year so I guess I need to figure out the claim of right thing

Your situation is exactly the type where getting a free appointment at a VITA (Volunteer Income Tax Assistance) site could really help. They're IRS-trained volunteers who help people with exactly these kinds of complications at no cost.

Same honestly. I posted this kind of panicking and I feel way more informed now. Still need to run the actual numbers but at least I know what I'm dealing with.

agreed this thread answered like 5 questions I had. Bookmarking it.

Just did this. Added up all my payments and now I have a number to plug into the IRS estimator. This was a great tip thanks.

smart, why wait for the form when you can calculate it yourself from your own account

Also worth noting you can request your 1099-G electronically through UI Online instead of waiting for the paper version in the mail. Usually available earlier than the mailed copy.

Your roommate is incorrect. There's no minimum threshold for unemployment benefits - any amount you received needs to be reported on your federal return. EDD is required to issue you a 1099-G for any benefits paid regardless of the amount. Underreporting income is not something you want to mess with even for small amounts.

ok ill tell him, he's gonna be annoyed lol

This is a surprisingly common misconception. Every dollar of unemployment compensation is taxable federal income. The only exception would be if your total income for the year was so low that you fell below the filing requirement threshold entirely.

Is the underpayment penalty actually significant? Like is it worth the effort to make that estimated payment?

The penalty is currently based on the federal funds rate plus 3%, so it's not devastating but it's not nothing either. If you think you owe more than $1,000 in federal tax it might be worth making that estimated payment. If it's less than that, probably not worth the hassle.

okay this is getting pretty deep into tax territory but I appreciate having all the options laid out

I'm going to try this to verify my payment totals before my 1099-G arrives. Thanks for linking the video.

Fine I'll try it. Better than my current approach of calling 30 times and getting nowhere

This is good advice. Even if the number is scary I'll definitely file on time. At least now I know what to expect and can plan for it.

really appreciate you sharing professional knowledge in this thread, it's made the whole thing way less intimidating

yeah agreed, this thread has more useful info than anything I found when I was googling this last year