This post has to do with what COVID-19 federal stimulus ($1,200) and
federal unemployment ($600/week) payments are taxable, along with CA state
My daughter was self employed but due to the virus, she could no longer
interact with her clients. She applied for CA unemployment.
As a result, she got:
1) the $1,200 advance tax credit
2) a $167 weekly check from CA Employee Development Department (EDD),
which included an additional
3) $600 per week, from the Feds
The $167 check was the first to come, and she authorized a 10%
withholding, $17, for Federal taxes.
After two weeks, the check (actually, these are direct deposits) included
the $600, for a total of $167 CA + $600 Federal -$17 Federal tax = $750.
She also got a paper form to fill out every two weeks stating if she found
work, and allowing her to check the box to withhold 10% for Federal taxes.
She thought it was curious that there was no box to authorize a larger
Federal withholding for the additional $600/week.
So the questions are:
1) CA unemployment is not taxable by CA, but is by the Feds, thus the 10%
withholding on the CA $167. Yes?
2) She assumes the $600 "Federal unemployment" is also taxable by the
Feds, even though there was no place on the CA EDD paper form to have it
3) If the $600 is taxable by the Feds, it will appear as income on her
Federal tax return. Will this "Federal unemployment" be taxable by CA?
My suspicions are 'yes', but I've researched this and cannot find an
One final bit of information...
She did establish an other self employment activity by making custom hand-
made articles and selling them on a well-known website. The business is
doing well, and the website will be sending her a 1099-G,
When she gets the next paper form from the CA EDD, (sorry, don't have the
form in front of me, and can't remember the form name/number), she will
state that she has 'found work' and the form will ask, if so, 'how much
did you make'? Because she just started the business, it's hard to
determine 'how much'. Gross? Net? Will CA reduce her last check by the
What she is most worried about is that the CA EDD keeps sending her the
$167 - $17 check even though she's said she is now working, and because of
my dealing with the CA EDD, I don't blame her. If she receives these $150
checks, what should she do? My thought is all she can do is not fight
city hall, and since Federal taxes are already withheld, and there's no CA
tax liability, just accept the money, and claim on her tax returns.
Thanks if you've read this far.
- posted 1 month ago