Or, if your income was high enough last year, this tax forgiveness may not help you at all. Possibly you'll still owe some tax if you were on unemployment for many months. Depending on your situation, that could mean you'll end up owing nothing on the benefits you received last year. That's why some Californians who chose the withholding option may now be surprised to owe a substantial amount in taxes.īecome a sponsor But didn't Congress just waive taxes on last year's unemployment benefits? It didn't touch the enhanced federal payments, which added an extra weekly $600 on top of state benefits during the early phases of the pandemic. It only withheld 10% from state unemployment benefits. Keep in mind, EDD's withholding option did not cover all benefits in 2020.

If you didn't withhold anything, you'll have to pay any taxes owed out of pocket. You can find the amount you withheld during 2020 in Box 4 on the 1099-G tax form you should've received from EDD. You needed to actively click the withholding box when certifying each week.

California's Employment Development Department (EDD) - the agency that administers unemployment benefits - gives recipients the option to withhold money from their biweekly payments.īut withholding is not mandatory. and what tax bracket you fall under based on that income.ĭepending on how much unemployment you received in 2020, and how much money you earned overall, tax professionals say you could be in for an unpleasant surprise. How much you owe will depend on how much income you collected last year - from unemployment, W2 employment, freelancing, investments, etc. However, federal income tax still applies. Of all the states that levy a state income tax, only a handful exclude unemployment benefits, and California is one of them. But unemployment checks are considered income, and you'll have to report that money when you file.īut there's good news if you live in California. This can understandably come as a shock to those who find the whole unemployment system confusing. I have to pay taxes on my unemployment benefits?

What tax form for unemployment