USA State Payroll Rates + Resources: State of California: Filing Personal Income (Withholding) Tax, Unemployment & State Disability Insurance, W-2s and 1099s, and Report of Independent Contractors
Purpose
The purpose of this documentation is to outline the processes and requirements associated with submitting unemployment insurance reports and submitting unemployment insurance payments in the state of California.
Personal Income (Withholding) Tax and Unemployment & State Disability Insurance Reporting and Deposits
State Payroll Taxes Summary
| Unemployment Insurance (UI) | Employment Training Tax (ETT) - a portion of UI | State Disability Insurance (SDI) | California Personal Income Tax (PIT) (Withholding) | |
| Who Pays? | Employer | Employer | Employee (employer withholds from employee wages) | Employee (employer withholds from employee wages) |
| Taxable Wages | First $7,000 of subject wages per employee, per year | First $7,000 of subject wages per employee, per year | First $118,371 of of subject wages per employee, per year | No limit. Refer to the PIT withholding schedules on the EDD website. |
| Tax Rate | New employer tax rate is 3.4% for a period of two to three years. | Set by statute at 0.1% of UI taxable wages for employers with a positive UI reserve account balances and employers subject to section 977(c) of the CUIC | The 2019 SDI withholding rate is 1.0%. | Withheld based on the employee's Form W-4 or DE 4. |
| Maximum Tax (Except when employer is subject to section 977(c) of the CUIC) | $434 per employee, per year. (The amount has been calculated at the highest UI tax rate of 6.2% ($7,000 x .062) | $7 per employee per year ($7,000 x .001) | $1,873.71 per employee, per year ($118,371 x .01) | No maximum |
Payroll Tax Withholding Deposit (DE 88) Requirements for Personal Income (Withholding) Tax (PIT) and State Disability Insurance (SDI):
| If Your Federal Deposit Schedule / Requirement Is | And You Have Accumulated State PIT Withholding Of | If Pay Date Is | PIT and SDI Deposit Due By | California "Deposit Schedule" |
| Next-Day | Less than $350 | Any Payday | Last day of the following month after the end of the quarter. | Quarterly |
| Next-Day | $350 to $500 | Any payday | 15th of the following month | Monthly |
| Next-Day | More than $500 | Any payday | Next business day | Next-Day |
| Semi-Weekly | Less than $350 | Any payday | Last day of the following month after the end of the quarter | Quarterly |
| Semi-Weekly | $350 to $500 | Any payday | 15th of the following month | Monthly |
| Semi-Weekly | More than $500 | (1) Wed., Thurs., or Fri. (2) Sat., Sun., Mon., or Tue. | (1) Following Wednesday (2) Following Friday | Semi-Weekly |
| Monthly | Less than $350 | Any payday | Last day of the following month after the end of the quarter | Quarterly |
| Monthly | $350 or more | Any payday | 15th of the following month | Monthly |
| Quarterly or Annually | Less than $350 | Any payday | Last day of the following month after the end of the quarter | Quarterly |
| Quarterly or Annually | $350 or more | Any payday | 15th of the following month | Monthly |
Payroll Tax Withholding Deposit (DE 88) Requirements for Unemployment Insurance (UI & ETT)
Unemployment (UI & ETT) deposits are due quarterly:
| Quarters | Months in the Quarter | Due Date |
| 1st Quarter | January - March | Due April 30th |
| 2nd Quarter | April - June | Due July 31st |
| 3rd Quarter | July - September | Due October 31st |
| 4th Quarter | October - December | Due January 31st |
Reporting
Employers use the Quarterly Contribution Return and Report of Wages (DE 9) to reconcile payroll tax payments and total subject wages reported for the quarter. You must submit a DE 9 AND a Quarterly Contribution Return and Report of Wages (Continuation) (DE 9C) each quarter at the E-Services for Business web-site
These reports are due on the first day of the following month after the end of the quarter, and they must be submitted even if you had no payroll during a calendar quarter.
| Quarters | Months in the Quarter | Due Date |
| 1st Quarter | January - March | Due April 30th |
| 2nd Quarter | April - June | Due July 31st |
| 3rd Quarter | July - September | Due October 31st |
| 4th Quarter | October - December | Due January 31st |
W-2s and 1099s
Federal Forms W-2
Do not send a copy of Form W-2 or Form W-2C to the State of California (the EDD or the Franchise Tax Board [FTB]). The Forms W-2 and W-2C are not filed with the state because you should already be reporting wage and withholding information to the EDD on the Quarterly Contribution Return and Report of Wages (Continuation) (DE 9C). However, you must continue to send Forms W-2 and W-2C to your employees and the Social Security Administration.
For further details (ie. in which box the state wages, income tax, and local income tax should be reported on the W-2 and California descriptions for those boxes) see page 71 of the 2019 California Employer's Guide.
Federal Forms 1099
The California Franchise Tax Board (FTB) recommends that you file under the IRS Combined Federal/State Filing program. When you are approved and use the IRS Combined Federal/State Filing program, you only have to file once. The IRS will forward your California returns to the FTB. The following forms may be filed under this program: Forms 1099-DIV, 1099-G, 1099-INT, 1099-MISC, 1099-OID, 1099-PATR, 1099-R, and 5498.
If you are not participating in the Combined Federal/State Filing program and:
File 250 or more information returns of one type: You must file directly with the FTB electronically.
If you file less than 250 returns electronically or on paper with the IRS: You should use the same method to file with FTB.
If you file paper information returns with the IRS: Do not send a paper copy to the FTB. The IRS will forward the information to the FTB. This applies to paper filing only.
Generally, the FTB’s reporting requirements are the same as the IRS reporting requirements. For specific differences, go to www.ftb.ca.gov/businesses/infortrns/how_to_file.shtml.
California currently does not require you to file an annual reconciliation apart from the required quarterly reports.
For further details see the 2019 California Employer's Guide.
Report of Independent Contractor(s) (DE 542)
Any business or government entity that is required to file a federal Form 1099-MISC for personal services performed must also report specific information to the Employment Development Department (EDD) regarding any independent contractor providing services to you or your business.
Filing Options for Reporting Independent Contractors:
File online using e-Services for Business
Download Form DE 542
Order Form DE 542 using the EDD Website.
When Due: Independent contractor information must be reported to the EDD within 20 days of EITHER making payments totaling $600 or more OR entering into a contract for $600 or more with an independent contractor in any calendar year, whichever occurs first.
This is in addition to your requirement to report the total annual payments to the Internal Revenue Service on a Form 1099-MISC after the close of the calendar year.
Filing an Informal Report
If you are not able to obtain a DE 542 by the due date, you may file an informal report to avoid penalty and interest charges. Your informal report must include all the information listed at the 2019 California Employer's Guide (page 55).
Mail or fax your independent contractor information to:
Employment Development Department
Document Management Group, MIC 96
PO Box 997350
Sacramento, CA 95899-7350
Fax: 1-916-319-4410
If you are reporting a large number of independent contractors, we encourage you to send the information electronically. You can file online using e-Services for Business.
IF YOU FILE ELECTRONICALLY, DO NOT FILE A PAPER DE 542.
For additional information on ICR electronic filing refer to the following:
Electronic Filing Guide for the Independent Contractor Reporting Program (DE 542M)
By contacting the Taxpayer Assistance Center by phone at 1-888-745-3886.