I received disability payments through my employer's California Voluntary Disability Plan (VDP), which is a substitute for California State Disability (SDI) by EDD. MetLife which administered the Voluntary Disability Plan sent me a W-2 for the amounts I received. However, EDD told me that EDD's SDI does not need to be reported as income on tax return and thinks it should be the same for VDP payments. But my CPA is saying that it should be reported as income since MetLife issued the W-2 with the payment amount listed in Box 1. He's saying that the only way it would not need to be reported is to have zero amount in box 1 wages, and code J in box 12. Is that correct? I think MetLife issued the W-2 to show how much taxes were deducted from the disabiltiy payments.
