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It depends. If you pay the full premiums with after tax dollars (meaning you did not get any type of state tax benefit for the premiums) for the short term disability insurance, then it is not taxable when you receive the payments.
If your employer paid the premiums, then it is taxable, just like your normal wages are taxable. If you did not pay taxes on the premiums, then the benefits would be taxable.
If you paid part of your premiums and your employer paid the other part of your premiums, then you would prorate the amount that is taxable. So, if you paid half of the premiums (with after tax dollars) and the employer paid half of the premiums, then your benefits would be 50% taxable (or prorated based on employer/employee contribution rate)
This is also true for your federal return.
It depends. If you pay the full premiums with after tax dollars (meaning you did not get any type of state tax benefit for the premiums) for the short term disability insurance, then it is not taxable when you receive the payments.
If your employer paid the premiums, then it is taxable, just like your normal wages are taxable. If you did not pay taxes on the premiums, then the benefits would be taxable.
If you paid part of your premiums and your employer paid the other part of your premiums, then you would prorate the amount that is taxable. So, if you paid half of the premiums (with after tax dollars) and the employer paid half of the premiums, then your benefits would be 50% taxable (or prorated based on employer/employee contribution rate)
This is also true for your federal return.
Thank you for your response @Vanessa A . How can I tell if I paid or my employer did?
Usually if it is on your W2 Box 14, that amount is the premiums that were taken from your paycheck for the state disability fund. If you are in California, for example, usually the state system would pay you if you qualified and you would not pay tax on that at the state level but this would be taxable on the federal tax return. Here is information on the state SDI State Disability Insurance - EDD - CA.gov. @pixiefairy88
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