What is unemployment tax and how does it affect my California EDD benefits?

Wait so California doesn't tax the benefits but the federal government does? That's actually really helpful to know. Should I be requesting withholding from my weekly payments now or just deal with it at tax time?

yes definitely request the withholding if you can afford slightly smaller checks, way better than getting hit with a big bill in april

To add to this excellent breakdown - you can request federal tax withholding of 10% directly through your UI Online account. Go to your payment options and there should be a federal withholding election option. Highly recommend doing this especially if your benefit amount is substantial.

ok that makes more sense. so when i see 'unemployment insurance tax' in news articles they're talking about what businesses pay?

exactly. the rate employers pay depends on how many claims get filed against them which is why some companies fight unemployment claims so hard lol

omg the hold times are no joke. I've been disconnected twice already. I'll check out that claimyr thing, thanks

second this, claimyr saved my sanity when i was trying to sort out my adjudication situation. getting a human on the line makes such a difference

Does claimyr work for like general questions or only for claim issues? Asking because I have a simple tax withholding question and don't know if it's worth using for something minor

1099-G - ok writing that down. Does California EDD mail it automatically or do I have to request it?

It should be available in your UI Online account and they typically mail a paper copy as well. Make sure your address is current in the system. You can view it under the tax documents section of UI Online once it's generated in January.

mine came in the mail but honestly i downloaded it from ui online like two weeks before the paper version showed up. just log in and check your documents section

same honestly. the whole system is confusing by design i swear

right?? like they could explain this in like one paragraph but instead you have to piece it together from 15 different government websites

Oh interesting - so SDI is the one that actually shows on my pay stub then? I've seen that deduction and wondered what it was for.

Yes exactly. If you look at an old pay stub you'll see 'CA SDI' as a deduction - that's your SDI contribution. You'll never see 'CA UI' or 'unemployment tax' on your pay stub because that portion is entirely employer-paid.

this is the most useful thread i've found on this topic. bookmarking it

Yes, that's exactly why. California uses an 'experience rating' system where employers with more UI claims filed against them pay higher SUTA tax rates. So some employers contest claims even when they know they'll lose, just to delay or discourage claims.

that is genuinely enraging to learn. so they made me wait through adjudication just to protect their tax rate?

Unfortunately yes, that's a very common tactic. The good news is if you were laid off legitimately your claim should be approved regardless, it just might take longer through adjudication. Make sure you're still filing your weekly claims during adjudication or you'll lose those weeks even if you're eventually approved.

Generally no - independent contractors and self-employed individuals don't pay into the UI system and aren't eligible for regular California EDD unemployment benefits. There's no employer making contributions on their behalf. Your brother would need to look into other options if he's fully self-employed through gig work.

ugh that's what I figured. the gig economy really leaves people without a safety net

some gig workers qualify for SDI though depending on their situation, worth looking into separately

Wow I had no idea the fund could go insolvent. That's kind of alarming from a 'will my benefits actually be there' perspective

The benefits themselves are always paid even when the fund is low - California borrows from the federal government if needed. So as a claimant your payments are secure, it's more of a long-term fiscal issue for employers who end up paying higher rates.

good to know. i was about to spiral about whether my weekly payments would just stop randomly

$800 surprise sounds awful. Yeah I'm definitely going to set up the withholding now. Better to get slightly less each week than a big bill.

exactly. go into ui online, its under payment options or account settings, took me like 2 minutes to set up once i found it

did you have to fill out a W-4V or does ui online handle it without the form?

That sounds like a nightmare - having a wrong 1099-G must have been really stressful around tax time

It really was. Had to file for an extension and everything while waiting for the corrected form. The agent was helpful once I got through but getting there was the problem.

You're right, I filed it this morning actually! Didn't want to risk missing the window. Thanks for the reminder though.

Good! The weekly certifications are honestly the most important ongoing task. Everything else can be figured out but missing a weekly claim is hard to fix after the fact.

this ^^^. i missed one week because i was too stressed about my adjudication situation and those benefits were just gone. don't make my mistake

No difference - whether you're on standby, regular UI, or any other California EDD program, the benefits are all treated the same for federal tax purposes. They all get reported on the same 1099-G and are all taxable federally but not at the California state level.

perfect, that's what i assumed but good to confirm. my standby situation is complicated enough without tax differences on top of it

Same honestly! I feel way less anxious about the whole thing now. This forum has been more helpful than hours of googling.

right?? like i wish there was a plain english guide somewhere on the edd website that just explained all the basics without assuming you already know how everything works

This is technically correct but the situation is actually more nuanced - if you received benefits and were later found to have an overpayment, you'd typically need to repay the benefits themselves. The tax treatment would depend on whether you actually repaid. Definitely a situation where a tax professional would help.

yeah fair point it gets complicated fast. my main point was just that the 1099-G doesn't always tell the complete story if your claim had complications

The main California EDD UI line handles everything including tax questions - there isn't a separate tax-specific number unfortunately. The main line is 1-800-300-5616. Call volume is highest Monday mornings and lowest Wednesday through Friday afternoons in most people's experience.

honestly if you're having trouble getting through try claimyr.com - that's what I've been using when I need to actually reach an agent. Has a video demo at https://youtu.be/JmuwXR7HA10 that shows how it works. Way less frustrating than the regular hold system.

trying claimyr now since I've been disconnected twice today already. at this point anything is worth trying

Yeah that was the most surprising thing I learned in this thread honestly. Nice to have one thing working in your favor during an already stressful time.

exactly. and with california's cost of living every little bit helps when you're between jobs

She may have been confused about which deduction was which, or possibly had SDI-related deductions she misidentified. Regular California UI unemployment benefits are definitively not subject to California state income tax. It's possible she had federal withholding that she thought was state, or there may have been other items on her payment summary that caused confusion.

ok yeah that probably explains it. she's not super detail oriented with financial stuff lol. good to know the actual answer

Also worth noting - you can check your actual payment breakdown in UI Online to see exactly what if anything is being withheld from each payment. It itemizes everything so there's no guessing.

This is the comment I needed at the very start lol. Thank you for the clean summary!

saving this for everyone I know who goes on unemployment and gets confused about this

mods should pin this thread honestly