What happens if you don't withhold taxes on California EDD unemployment benefits?

Wait so California doesn't tax unemployment at all? I was worried about both federal AND state. That's actually a relief. But yeah the federal part still has me nervous, I was getting around $450/week for 4 months so that adds up.

yes CA doesn't tax UI benefits, only federal. i learned this the hard way two years ago lol

This is correct about California not taxing unemployment. Just want to add that the IRS underpayment penalty is generally triggered if you owe more than $1,000 when you file AND you didn't pay at least 90% of your current year tax liability or 100% of last year's liability throughout the year. So depending on your other income situation it might not be as bad as you think.

Did you get hit with any penalty on top of the $800 or was it just the straight tax amount?

just the tax, no penalty for me. think it depends on your total income situation for the whole year

Oh interesting, I've been dreading calling EDD. Does this Claimyr thing actually work or is it one of those sketchy services?

I was skeptical too but it worked for me. You literally just wait for a callback instead of sitting on hold yourself. The EDD agent I got was actually helpful once I got through, which was the surprising part lol

gonna look into this. been trying to reach EDD for two weeks about a completely different issue and can't get anyone

what if i already certified for weeks without withholding? can they retroactively withhold from past payments or only going forward?

Only going forward from when you make the change. Past payments that already came through cannot have withholding applied retroactively. That's why the earlier you change it the better, but it's never too late during an active claim.

This is really helpful, thank you. So basically I need to set aside some money now for April and just turn on withholding for whatever weeks I have left on my claim.

same here, nobody explained any of this during the initial claim process. you're kind of just thrown into it

To be fair EDD does include information about taxes in the initial claim materials but it's buried and easy to skip over when you're stressed about just getting benefits started. Definitely wish it was more prominent.

buried is the right word. like yes technically it's there if you read every single page carefully but when you're just laid off and panicking about bills you're not reading every footnote

Yes absolutely, you report ALL unemployment income regardless of how short the period was. The 1099-G will show exactly what you received and the IRS gets a copy too so there's no option to just not report it.

ughhh okay. thought maybe since i only got benefits for like 6 weeks it might be under some threshold. guess not

There's no minimum threshold for reporting 1099-G income. Even $200 in benefits needs to be reported on your federal return.

In the current UI Online interface it's usually found by going to your claim summary page, then looking for a section called 'Withholding' or sometimes it appears under your payment preferences. If your claim is active you should see an option to elect 10% federal withholding. If you genuinely can't find it after looking carefully, calling EDD directly is probably the fastest fix — though getting through is its own challenge.

i tried calling three times this week. first two times it said call volume too high and hung up. third time i held for 90 minutes and got disconnected. this is ridiculous

That's exactly the situation where Claimyr helped me — the service at claimyr.com basically queues you up to talk to an EDD agent without you having to do the hold marathon yourself. Saved me from losing my mind after the same experience you're describing.

ok seriously looking this up right now because i cannot do another 90 minute hold just to get dropped

That's actually good to know. I was kind of in the back of my head thinking 'what if I just don't file' which I know is not smart but when you're stressed you think dumb things

yeah don't do that lol. the failure to file penalty is 5% of what you owe per month. the failure to pay is only 0.5% per month. so always file even if you can't pay

this thread is genuinely more useful than anything i found googling this topic for an hour

Yes, the IRS can offset your federal tax refund and in some cases pursue other collection, but direct garnishment of ongoing unemployment benefits is more complicated and typically requires additional steps. More commonly people see their tax refund taken if they owe back taxes. The better approach is to address IRS debt directly through an installment plan before it escalates to garnishment territory.

okay that's slightly reassuring. i owe from 2022 and just started a UI claim, was worried they'd just take my weekly payments automatically

Oh wow I didn't think about it that way. I had some freelance income this year too so my situation is more complicated but that's really helpful context for people whose only income was UI

This is accurate for single filers. For people with a mix of W2 income, freelance income, and UI benefits the calculation gets more complex because the UI benefits stack on top of everything else and you might push into a higher bracket.

yeah definitely more complicated with multiple income sources, was just saying for the purely unemployed all year situation it might not be as devastating as people fear

This is actually really reassuring to hear. I think I've been catastrophizing about this.

free file is clutch for simple returns, forgot that was a thing

You can access your 1099-G electronically through UI Online — log into your account and there's typically a section for tax documents. Definitely update your address through UI Online and also through the USPS to forward mail just to be safe, but the electronic version is usually available by late January and is your most reliable access to it.

oh perfect didn't know it was in UI Online, that's way easier than waiting for mail

yeah the electronic 1099-G is available in UI Online usually around January 20-31 for the prior year. you get an email notification when it's ready if you have email notifications turned on

same reaction i had when i found out. take a breath, it's manageable. just log into UI Online and turn on withholding for your remaining weeks and start setting aside a little from each payment you've already gotten

Really common to not know this going in. The important thing is you found out now while you still have time to adjust your withholding and plan for tax season rather than finding out in April with no warning.

okay logging into UI Online right now to fix this. i have like 8 more weeks left on my claim so at least i can get some withholding going on those

this is why threads like this are so valuable, EDD sure isn't going to remind you

This is actually timely for me, I did have 6 months of regular income before getting laid off. Might look into that Q4 estimated payment option.

yeah this is solid advice for people with mixed income years. the quarterly payment thing catches a lot of people off guard because most employees are used to withholding just happening automatically and never think about it

Getting through to EDD is genuinely its own skill at this point. I mentioned Claimyr earlier in this thread — claimyr.com — and it's honestly the only reason I've been able to actually speak to an EDD rep in reasonable time. There's a video showing how it works at https://youtu.be/JmuwXR7HA10. Completely changed how I deal with EDD questions that I can't resolve through UI Online alone.

adding this to my bookmarks for next time i need to call. the two times i got through were luck honestly, spent hours trying before that

haha at least you checked! better to know for sure

honestly this whole thread made me check mine too and I had accidentally selected withholding for state only (which does nothing since CA doesn't tax UI) and not federal. fixed it now

This is really accurate. The flat 10% works fine if UI is your only or primary income for the year, but for people who worked earlier in the year and then collected benefits, that 10% rarely covers the full liability.

This is the most useful specific number I've seen in this thread. Going to use the 10% withholding going forward AND set aside an extra 8% just to be safe. Thanks for sharing.

yeah the 'UI was my first time dealing with taxes outside of a W2' situation is where people get surprised. employer withholding is calibrated to your actual income and bracket, the flat 10% UI withholding is just a rough average

Good to know, seems obvious in retrospect but definitely something I wouldn't have thought to question.

wait do you still get a 1099-G even if it was only a few hundred dollars? like if you only certified for 2-3 weeks before getting a job?

yes, technically any amount generates a 1099-G because EDD reports it to the IRS regardless. whether it actually affects your tax liability depends on your total income situation but the form gets generated either way