I was separated from my employer (fired), but days prior I had a relapse of a disability and out sick. Now unemployed I contacted the CA EDD to file for UI however was informed I'm not eligible given I'm disabled, but may qualify for CA DI benefits. I followed through with the application and doctor certification of disability. The application was approved. However, EDD determined that since I was disabled for the 5 days prior to termination, my former employer is "liable" for DI benefits. My former employer has an approved voluntary plan with the state. My employer concurred with the EDD assertion. I am not receiving any additional company offered disability benefits - only the exact gross amount the EDD determined was my calculated daily benefit amount. My employer is withholding state and federal taxes on these payments. Under another circumstance if I had become disable while seeking employment, the state would pay me directly and these payments would NOT be considered taxable income for either state for federal. My question (at last) - given I'm only getting disability benefits equal to the EDD calculated amount, is the benefit/income taxable or not? I feel this a nothing more than a pass through of state DI payments through the employer to me. As an employee, VDI was deducted from my wages. I did not pay any % of cost sharing for the employer voluntary plan cost.
