EDD SDI tax filing confusion - report disability benefits on 2025 taxes?

California SDI benefits are NOT taxable on your federal return if you paid into the system through payroll deductions (which most CA employees do). The IRS doesn't consider it taxable income because you already paid tax on the money that went into SDI. You don't need to report it on your federal taxes. However, if your employer paid for your disability insurance as a benefit without you contributing, then it would be taxable. You can verify this on the EDD website or in IRS Publication 525.

I got SDI last year too and my tax guy said dont report it!! But my sisters accountant told her 2 report it then subtract it somewhere else on the form?? idk tax stuff is so confusing lol

The correct answer depends on who paid for your SDI coverage. If you paid the premiums (through the standard CA payroll deduction that most employees have), then the benefits are NOT taxable on your federal return. If your employer paid the premiums, then the benefits ARE taxable. For California state tax purposes, SDI benefits are not taxable regardless of who paid the premiums. Given that you mentioned normal payroll deductions, your SDI benefits should not be taxable on either your federal or state returns. You don't need to report them at all. If you're still concerned, you can call EDD directly to confirm, though getting through can be challenging with their high call volumes.

Thanks everyone for the responses. I'm still a bit confused about my tax software asking specifically about disability income. Should I just answer "no" to that question since the SDI doesn't need to be reported? Or do I need to say "yes" but then indicate somewhere that it's not taxable?

i went thru the same thing after my back surgery last year! what helped me was calling my HR department at work. they knew exactly how it worked with taxes and our specific payroll setup. might be worth asking your company's HR or payroll dept if you're still not sure after all these answers.

Just throwing in my experience - I was on SDI for 4 months in 2023 and didn't report it on my taxes. I actually asked my tax preparer specifically about this and she confirmed that since I paid into SDI through normal payroll deductions (the usual CA state disability insurance deduction on your paystub), the benefits are not federally taxable. No issues with my return.

Here's an easy way to know if your SDI was the non-taxable kind: Check your most recent paystub from before you went on leave. Look for a deduction labeled "CA SDI" or "CASDI" or sometimes just "SDI". If you see that deduction, then you were paying into the state plan yourself, and your benefits are NOT federally taxable. If you had a different type of disability insurance (private, employer-provided, etc.), then different tax rules might apply. But standard California State Disability Insurance benefits are not taxable when the premiums were paid by you with after-tax dollars.

I'm new here but just went through something similar! I was on SDI for about 6 weeks last year after a surgery and had the same confusion about taxes. What really helped me was looking at my final SDI payment notice from EDD - it actually has a note at the bottom that says something like "If you paid SDI contributions through payroll deductions, these benefits are generally not taxable for federal purposes." I ended up not reporting mine on my federal return and had no issues. For the tax software question about disability income, I selected "no" since it was asking about taxable disability income specifically. Just make sure you keep all your SDI paperwork in case you ever need to prove it wasn't taxable income!

I went through this exact same situation last year! I was on SDI for about 3 months and was totally confused about the tax implications. What helped me was actually calling a tax professional who specializes in California taxes - they confirmed that since I paid into SDI through my regular payroll deductions (which you can see on your paystubs as "CA SDI" or similar), the benefits are NOT taxable on federal returns. For your tax software question, I ended up answering "no" to the disability income question since it was specifically asking about taxable disability income. The key thing is that California SDI benefits are only taxable if your employer paid the premiums for you, which is rare - most of us pay into it ourselves through payroll deductions. You can also double-check by looking at whether you received a 1099-G form from EDD. If you didn't get one, that's usually another sign that your benefits weren't considered taxable income. Hope this helps ease your mind!

I just went through this same situation! I was on SDI for about 2 months last year after a medical procedure and had the exact same confusion about taxes. After doing a lot of research and talking to a tax preparer, here's what I learned: If you paid into CA SDI through your regular payroll deductions (which most CA employees do), then your SDI benefits are NOT taxable on your federal return. You can confirm this by checking your old paystubs - if you see a deduction for "CA SDI" or "CASDI", then you paid the premiums yourself and the benefits aren't federally taxable. For your tax software, when it asks about disability income, you should answer "no" since it's specifically asking about taxable disability income. Your CA SDI benefits don't fall into that category if you paid the premiums through payroll deductions. Also, if EDD didn't send you a 1099-G form, that's another good indicator that your benefits weren't considered taxable income. I didn't receive one either and had no issues with my tax return. Hope this helps put your mind at ease! It's definitely confusing when different sources give conflicting information, but the consensus here seems pretty clear for standard CA SDI situations.

I'm new to this community but wanted to share my recent experience since I just dealt with this exact situation! I was on SDI for about 10 weeks last year after a complicated surgery and had the same tax confusion. What really helped me was calling my company's payroll department - they were able to quickly confirm that since I pay into CA SDI through regular payroll deductions (you can see this as "CA SDI" or similar on your paystubs), my benefits were NOT taxable on my federal return. They even sent me a quick email explaining it so I had it in writing. For the tax software question about disability income, I answered "no" since it's specifically asking about taxable disability income, which CA SDI isn't when you pay the premiums yourself. I filed my return about a month ago with no issues. One tip that saved me time: if you're still unsure, most tax software has a live chat or phone support option where you can ask specifically about "California State Disability Insurance" and they can walk you through how to handle it in their system. Much faster than trying to get through to EDD! It sounds like you're in the same situation as most of us here - paying into SDI through payroll deductions means your benefits aren't federally taxable. Hope this helps ease your stress about filing!

Hi everyone! I'm new to this community but just went through this exact same situation a few weeks ago. I was on SDI for about 8 weeks last year after a work injury and had the same tax confusion that Isabel is dealing with. What really helped me figure it out was looking at my final EDD payment statement - it actually has a small note that mentions the tax implications. Since I paid into SDI through my regular payroll deductions (which you can verify by checking your paystubs for "CA SDI" deductions), my benefits were NOT taxable on my federal return. For the tax software question, I ended up calling the support line for my tax prep software and asked specifically about "California State Disability Insurance benefits paid for through employee payroll deductions." They confirmed I should answer "no" to the taxable disability income question since CA SDI benefits aren't taxable when you pay the premiums yourself. I filed my return about 3 weeks ago with no issues. The key things that confirmed it wasn't taxable for me: 1) I had CA SDI deductions on all my paystubs, 2) I never received a 1099-G from EDD, and 3) the EDD payment statement had that note about tax implications. Hope this helps! It's definitely stressful when you're not sure, but it sounds like you're in the same boat as most of us here with standard CA SDI coverage.

I'm new here but just went through this same situation! I was on SDI for about 5 months last year after a car accident and was completely confused about the tax implications. After reading through all these responses, I wanted to add one more confirmation point that helped me. I ended up speaking with an IRS representative directly (took forever to get through, but worth it) and they confirmed that California SDI benefits are NOT taxable on federal returns when you pay the premiums through payroll deductions. The agent explained that since you're paying into SDI with after-tax dollars (through your regular paycheck deductions), the benefits you receive are not considered taxable income. For anyone still unsure, here's what I used to verify my situation: 1) Check old paystubs for "CA SDI" deductions, 2) Confirm you didn't receive a 1099-G from EDD, 3) Look for any tax notes on your EDD payment statements, and 4) Remember that most CA employees pay into SDI themselves unless they have special employer-provided coverage. Isabel, it sounds like you're definitely in the standard situation where your benefits aren't federally taxable. For your tax software, answer "no" to taxable disability income questions since CA SDI doesn't fall into that category when you pay the premiums yourself. Hope this helps add to the consensus here!