@Alan Bosca, under California law, there are only a few legal reasons to withhold a tenant's security deposit. 

He is more than capable of paying the rent but is intentionally withholding.

I was thinking of accessing the "damage" when she leaves and withholding the $400 non-refundable pet deposit?

I believe that I am withholding more then will actually be needed strictly for w-2 income.

Having the place declared uninhabitable usually works to the advantage of a tenant anyway, and may require the landlord (eventually you) to make repairs to make it habitable (although a tenant's recourse is typically withholding of rent, so ...).  

Sometimes things happen,I would suggest like Wayne said withhold the EMD and make them at least work for it (That's why it's there).

When I opened my doors to my new company in the last week or two I came to find a new 1099-MISC tax withholding from the beginning of the year that I had never heard of.

It's common for people to withhold funds and hope you'll never sue.

Most, if not all, states impose penalties on landlords who wrongfully withhold a deposit. 

How do you pay yourself back (is it a monthly or bimonthly payment, is it taken directly out of your check like a withholding?