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  1. #1

    Default What is Taxable Gross when You Report Income to EDD

    My question involves unemployment benefits for the state of: California

    I have gone back to work on a on-call and part-time basis and I want to make sure I am reporting my income correctly. I was told to report my total taxable federal gross income before deductions as well as any taxable self-employment income. That's fine.

    However, my pay stub confuses me. I work for a place where there is an agreement between the union and the employer, but I'm not part of the collective bargaining unit because I am an hourly employee. About two years ago, I was forced to take a paycut while union employees had a choice between a paycut or a cut in a certain type of benefit.

    So, on my paystubs, it still lists the original amount I used to get paid as my "gross pay" and then it lists my reduction in pay amount. The amount of the pay after the reduction is what's reported on my W-2 as my federal taxable gross. So, that's what I've been reporting as that's what the first rep I talked to said to report. I got confused because I was told by another EDD rep to report income before any deductions and the way the pay reduction is listed it looks like any other deduction.

    It was a lot easier when we had the old paystubs because it listed your gross income right at the top in plain view. I think they do things this way because not everyone is getting a pay reduction, but if I had to show my paystubs to EDD, it would be hard to explain to them that I am not getting paid that amount.

    I don't want to get in trouble with EDD because I'm a few dollars off each week with my income reporting and don't want to go through any penalty weeks. Luckily, I have been over-reporting anyway because I have been reporting my non-verifiable self-employment income on top of my W-2 income.

    ETA: I know that my unemployment is based on the income after the pay reduction and is based on my federal gross income. I checked and double checked. I also checked my W-2 to make double sure that the income reported to the federal government is also after the pay reduction, too.

  2. #2
    Join Date
    Dec 2007
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    Default Re: What is Taxable Gross when You Report Income to EDD

    It's the gross pay you actually earn after any adjustments. "Before deductions" means before any deductions such as taxes, insurance, contributions, etc.

  3. #3

    Default Re: What is Taxable Gross when You Report Income to EDD

    Cool, thanks for clarifying this. I get so confused by people at EDD because when I ask two people about the same thing, I get two whole different answers! Ugh!

    I checked through all my EDD quarters from both years I've filed and all quarters reported to EDD are based on my federal gross income after the pay reduction and even after my 401K deduction (one rep told me that I had to report my income amount before my 401K deduction, but that's not reported to them).

    One rep even told me that if it's not the right amount, then I have to report it and have it corrected! But, if I reported it, there would be a big fight between them and my employer (and me) about how I'm not actually earning the "pay reduction" so I don't think it's worth it over such a small difference. I figured if my benefits are based on my federal gross income, then that's what I'm reporting (plus any other taxable wages and earnings).

    I guess I shouldn't worry because they will probably tell me if I'm not reporting it right. A rep once told me a long time ago that they're not going to waste their time investigating a claims that are just a few dollars off. And, if it's just a misunderstanding or an innocent mistake, they don't penalize you and may not even make you pay it back.

  4. #4
    Join Date
    Dec 2007
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    Default Re: What is Taxable Gross when You Report Income to EDD

    Just to clarify, though, it's not taxable earnings you have to report, but GROSS earnings. That means you do report before such deductions as 401k and insurance (if it's a pre-tax deduction).

    So, if your GROSS earnings after the adjustment is $500, then that's what you report, even if your taxable earnings after your 401k deduction (for example) is $475. See the difference?

  5. #5

    Default Re: What is Taxable Gross when You Report Income to EDD

    Yeah, I think that was the confusion, I was originally asking her about wheter or not I had to report my 401K deduction as income, too and the discussion turned into ALL adjustments, including my pay cut.

    So, just to make sure, I don't have to report the pay cut differential, but everything else I should report? In other words, if I was earning $10 a hour, let's say, and I got a pay cut and now I'm earning $9.70 and hour, I would report the $9.70 an hour, right?

    In my case, my paystub would list earnings as $10 and then say "pay reduction" -$.30 and the "federal gross wages/medicare wages" will say $9.70.

    Even though my reported quarters reflect only my federal gross wages after my 401K deduction, it's good advice you gave because when EDD does their quarterly benefit audit, they will ask my employer how much I earned per week and the 401K deduction is bi-weekly. So, they would probably report my weekly earnings before the deduction.

    I told them to stop taking the 401K deduction out, anyway, unless I am working the equivalent of full time.

  6. #6
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    Default Re: What is Taxable Gross when You Report Income to EDD

    Quote Quoting Desertgal
    View Post
    So, just to make sure, I don't have to report the pay cut differential, but everything else I should report? In other words, if I was earning $10 a hour, let's say, and I got a pay cut and now I'm earning $9.70 and hour, I would report the $9.70 an hour, right?
    That's correct.

  7. #7

    Default Re: What is Taxable Gross when You Report Income to EDD

    Thanks!

    I may double check with my payroll office to make sure that's what they actually report.

    I mean, it's only a difference of a few dollars and I really don't mind reporting the higher amount, but over-reporting can be just as bad as under-reporting your income.

  8. #8

    Default Re: What is Taxable Gross when You Report Income to EDD

    I wanted to add that if my employer only takes this reduction of pay off only when payroll is done, I might have to report the higher amount, anyway even though it's not really fair.

  9. #9
    Join Date
    Dec 2007
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    2,357

    Default Re: What is Taxable Gross when You Report Income to EDD

    No, you report only what you are actually paid.

    The quarterly reports the company submits to the state are for UI purposes, and that is gross pay. 401k is not included. So, that's the $9.70 per hour.

  10. #10

    Default Re: What is Taxable Gross when You Report Income to EDD

    Oh, OK. I thought when they did these quarterly reports and they find someone receiving benefits, EDD will ask the employer to submit a weekly pay report (so they can match it with what I report on my forms). Or, is that only done during special circumstances? Would it matter in this case if it's only off by a few dollars?

    And, since I get paid bi-weekly, would the pay adjustment only happen at payroll or would they deduct it when they report the weekly amount to EDD during benefit audits?

    A wise person did tell me to look at it this way: Pretend they were handing the money to me directly, what would I get? That's what I would report, she said.

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