Does unemployment have unemployment tax in California EDD?

Wait so you can actually change the withholding mid-claim? I thought once you started you were locked in or something. That's a huge relief if I can still opt into it.

Yeah you can flip it on during any certification, it's not a one-time-only thing. Each time you certify you get asked about federal withholding and you say yes or no right there.

Okay that changes everything for me. I'm certifying again next Tuesday so I'll make sure to actually read every screen this time instead of just clicking through.

wait so california doesn't tax it at all?? my coworker told me i'd owe both federal AND state and i've been setting aside like 20% of every payment. did i just stress myself out for nothing on the state side?

You stressed for nothing on the state side, yes. California exempts unemployment from state income tax. But hang onto that money you set aside - it'll cover the federal portion and then some, honestly.

I had the same misconception when I filed my first claim years ago. Someone at the EDD office told me to set aside 25% and half of that was just for a state tax that didn't exist. The federal bill was way smaller than I expected.

Is 10% usually enough to cover what people owe? Like if I'm getting $385 a week that's $38.50 withheld. I have no idea if that's going to be enough when April comes.

Honestly it depends on your whole tax picture - what you earned at the warehouse earlier in the year, any other income, filing status, deductions. For a lot of people collecting under $450 a week the 10% gets them close but everyone's situation is different. A tax person or even the free VITA tax help program in most counties can run the numbers for free.

I did the 10% last time and ended up with a small refund because my income for the year was low enough that I barely owed anything federally. So for some people it over-withholds a little.

Different things entirely. CASDI on your paystub was paying into California's State Disability Insurance and Paid Family Leave programs, nothing to do with unemployment. And unemployment benefits themselves - nothing gets deducted from them for CASDI either. The only withholding available on unemployment is the optional 10% federal.

Oh okay that actually clears something up for me. I thought maybe EDD was involved in collecting that CASDI money and that's why I'd owe them something. Good to know they're separate.

Yeah a lot of people think the CASDI deduction on their check is somehow connected to unemployment claims but it's completely separate. The employer is the one who pays for unemployment insurance - nothing comes out of your paycheck for it.

okay this is actually useful, i never look at anything in UI Online except my payment status. gonna bookmark the payments tab now

Five years is good to know. Last time I changed addresses mid-year I lost like three pieces of mail from EDD so having it in the portal is way better for me.

Exactly - and payment info in UI Online updates daily so you can track what's been issued before it even shows up in your account.

Correct. California unemployment benefits are exempt from California state income tax no matter the amount. Only federal income tax applies.

I genuinely had this backwards in my head for two years. I've been telling people to set aside for state taxes. Going to have to walk that back with a few people I know who filed recently.

Pretty common mix-up. The rule is unusual enough that most people assume it works like wages where both apply. EDD's own site spells it out but it's buried.

Pension income from past work can reduce your weekly unemployment benefit - EDD decides how much it affects things when you report it. You do report it when certifying because it's on the list of income to disclose.

I've been reporting it every two weeks on the certifications but my payments haven't changed from my original weekly amount of $310 so I wasn't sure if EDD was even seeing it or if the reduction just hasn't kicked in yet.

If your payment amount hasn't shifted yet, worth contacting EDD through the message option in your UI Online account to confirm they have the pension info and how they're applying it. Don't just assume it's being handled right.

wait really? so the date it posts to the card is what determines what tax year it falls in?

That's how it's worked for me and what my tax preparer confirmed. The 1099G EDD sends reflects what was actually paid out in that calendar year.

This is actually helpful because I got my first payment literally on December 30th of last year and I was confused about which year's return it would hit. Good to know.

Oof that sounds like a nightmare. Did you have to appeal the overpayment or did you just pay it back?

I appealed it because I disagreed with EDD's reasoning. Filed a written appeal within the 30 days shown on the Notice of Overpayment. The whole thing took months but eventually got resolved. Kept certifying the whole time like I was told to.

Good to know you kept certifying through the appeal. I think some people stop thinking their claim is frozen but you can lose the ability to get paid for those back weeks if you don't keep up with certifications.

Both get reported on the federal return, yes. W-2 wages go where they always go and the unemployment amount from the 1099G gets reported separately but they're added together when calculating your taxable income. Your effective tax rate ends up based on the combined total.

That's what I figured but I wanted to confirm. So my higher wages earlier in the year might actually push me into a higher bracket on the unemployment portion too.

Potentially, yes. Which is exactly why the flat 10% EDD withholds might not be enough for someone with a full year of solid wages before the layoff. Definitely worth running the actual numbers with a tax preparer or one of the free services.

That doesn't apply to me right now but I had no idea that was possible. I just assumed unemployment payments were protected from that kind of deduction.

Nope, EDD can deduct child support from unemployment benefits. Worth knowing early so it doesn't catch you off guard when your payment is lower than expected.

The calculator shows you the estimated weekly benefit amount before any withholding. It's just a gross estimate based on your wages - the official number comes on your Notice of Unemployment Insurance Award, the DE 429Z, after EDD processes your claim.

Got it, so the calculator is really just a ballpark for figuring out if you'll have a valid claim and roughly what to expect, not a net take-home number.

Exactly that. And the actual DE 429Z can differ from the calculator estimate depending on how EDD runs your base period wages, so don't treat the calculator number as final.

Not how it works at all. Employers pay the unemployment insurance tax on their own - nothing comes out of an employee's paycheck for it. The reason benefits are taxable federally is just because they're considered income by the IRS, same as wages would be.

okay so the whole 'you paid into it' thing people say is just wrong then

Completely wrong on the employee contribution side. Your employer carried that cost. You didn't pay into unemployment through any paycheck deduction.

This myth gets repeated constantly. The CASDI deduction people see on paystubs is for disability and paid family leave, not unemployment. Easy to see why people get confused but they're completely different programs.

Unused benefits don't roll over when the benefit year ends. The claim closes and those weeks are gone. If you're still out of work you'd file a new claim, but you can't get a new California claim until the benefit year on the current one has ended.

That's frustrating but good to know. I'll make sure to actually use the remaining weeks rather than assuming I can save them for later.

And on the tax question - whatever EDD actually paid out in a given calendar year shows up on that year's 1099G. So if payments came in both December and January, those would split across two 1099Gs.

The 1099G reflects the actual amounts paid out, not the full weekly benefit amount you would have received without earnings. So those reduced weeks show the reduced number.

Okay that's what I assumed but wanted to confirm because the difference was significant for some weeks and I wanted to make sure I wasn't reporting more income than I actually received.

Right, what you received is what's taxable. EDD isn't going to 1099G you for money you never got.

The maximum benefit amount on the DE 429Z is the total your claim can pay out during your benefit year - it's 26 times your weekly benefit amount or half of what you earned in the base period, whichever is less. Once you hit that total, the claim is exhausted. It doesn't reset.

Okay so once I hit that ceiling I'm done, there's no extension that kicks in automatically?

No automatic extension right now. Extended Benefits programs only activate under specific economic conditions, and they're not in effect currently. After 26 weeks or the max amount, the claim is done.

And just to add - even when Extended Benefits have been available historically, they've been tied to unemployment rate triggers, not something EDD offers to everyone. Never count on them when planning.

The identity verification thing caught me off guard too when I first applied. I did mine online and ID.me processed it pretty fast but I know people who had it take way longer. Glad your payment released.

Yeah the pending weeks in UI Online while waiting were stressful because there's no explanation, it just says Pending. Knowing the agent confirmed receipt made waiting way more tolerable.

Does the DE 1326C come even if you apply online? I applied through myEDD and I'm wondering if I should expect one.

EDD sends it when ID.me can't verify you automatically, regardless of how you applied. If you applied online and didn't get a verification request, you're probably already confirmed.

CalJOBS is entirely separate from taxes. It's about keeping your claim active by showing you're registered and looking for work. Nothing about CalJOBS touches the tax side of your benefits.

Figured as much, just wanted to make sure I wasn't missing some connection. The notice I got about CalJOBS registration - the DE 8405 - made it sound important enough that I wanted to confirm it wasn't connected to anything else.

You were right to register quickly. Missing that 21-day window can actually stop payments, which would be a bigger problem than any tax question. Glad you're on top of it.

Severance paid through your former employer is handled on the company's side - they issue a W-2 or separate documentation for it, it doesn't appear on your EDD 1099G. The 1099G only covers what EDD actually paid out in unemployment benefits.

That makes sense, they already withheld taxes on the severance through the payroll system. I just didn't want it accidentally showing up twice.

Two separate income sources, two separate tax documents. EDD's 1099G is only for the unemployment side. The severance shows up on the employer's side of your tax documents.

Okay good, confirms what I thought. And for anyone else in this situation - I was able to file for unemployment right away even with the severance package, didn't have to wait for the severance period to run out first.

Social Security doesn't get deducted from unemployment benefits and doesn't go on the EDD 1099G. EDD and Social Security are completely separate. Her 1099G would only show what EDD paid her in unemployment. Social Security has its own tax forms on that side.

She'll be glad to hear that. She was really worried the two would interact in some complicated way and reduce her payments.

The income type that can reduce unemployment payments is pension or retirement pay from past employment - which is different from Social Security. Worth her knowing the distinction.

Honestly, the UI Online certification screen handles the withholding choice during each certification cycle - that's probably your smoothest option to get it set up without the phone. During the certification it asks directly about federal withholding and you can say yes right there.

Oh I didn't realize it was built into the certification flow itself. I've been dreading the phone call but if I can just handle it during my next certification that's way easier.

Yep, each certification cycle asks. You don't need to call EDD just to change your withholding preference going forward.

The live chat through the Help button in UI Online is also an option on weekdays between 9 and 2, if you have a more complicated question that the certification screen can't answer. Beats 45 minutes on hold.

Close - the waiting week is unpaid so EDD doesn't include it in the 1099G total since no money changed hands. Your 1099G will reflect the actual payments EDD issued, so yes, the paid weeks at $310 each.

The waiting week thing still kind of gets me. So I certified for it and went through the whole process but just got nothing for that first week?

Exactly. The waiting week is just an unpaid first week that every claim goes through. After that the payments kick in normally. It doesn't change how many total weeks your claim can pay, it's just the upfront wait.

I burned a lot of time on my first claim thinking the waiting week payment was delayed rather than just not paid. The certification makes it feel like it should produce a check but it doesn't. Wish EDD made that clearer upfront.

The base period stuff confused me too at first. I didn't understand why my most recent two months of pay didn't count toward my weekly amount.

That was exactly my confusion. The standard base period goes back further than you'd expect, so a pay raise I got in the summer didn't help my weekly amount at all because those months weren't in the calculation.

This is making me want to actually look up the base period for my own claim and understand why my weekly amount is what it is. I just accepted the number on the DE 429Z without really checking where it came from.