Medical Expenses And California SDI

[dbmeyer]

Dear Turbotax Community,

My 2024 ended with the first two major medical surprises of my life. And the handling of that raises a couple 2024 tax questions that I sure didn't expect to be having. It has been an eye-opening how medical surprises rapidly change the tax landscape.

For context, I was a California resident for the whole 2024 year, and I've only worked at one company for the whole time. So all that is simple.

I have these questions.

1. For the months of Oct, Nov, and Dec 2024 I was on a medical leave of absence from work and was receiving payments from California's Employment Development Department (EDD) State Disability Insurance (SDI). SDI provided "wage replacement" (on the order of maybe 60% of my normal paycheck) for the 3-month period that I was on the medical leave.  I've read and been told (by non-experts) that the SDI payments are not taxable. And therein lies these questions:

Are the California SDI wage replacement wage replacement checks really tax free?

If they are tax-free, is there some place in my taxes (using Turbotax, of course) where I need to declare these checks?

2. The second topic is with regard to medical expenses. I had a variety of medical expenses, including emergency room billing, hospital stay, rehab/nursing stay, etc.  Insurance paid some of that, leaving some to me (of course):

May I include my out-of-pocket insurance co-payments as deductible medical expenses? 

(For example, the co-pay for the hospital stay, the co-pay for each doctor/lab/whatever appointment, the co-pay for all of the prescription medications, etc.)

Then there's the heavy hitter: I had very large out-of-pocket expenses for a company that provided me with essential in-house assistance (while I was bed-ridden). This company (Momentra Care) provides in-home caregivers and related services. Their services were considered required by my primary physician, but my insurance would not pay for any of it. (This was a significant percent of my total 2024 wages.)

May include my out-of-pocket expense for this Momentra Care in-home care as a medical expense on my taxes?

I want to thank any federal/California tax folks that can help with (I hope) simple answers and direction for these questions.

Blessings,

Doug

[AmyC]

1. CA SDI taxation -generally not taxable to federal or state. The exception relates to unemployment rather than disability. Yours should not be taxable. No need to declare it on your tax return.

2. Yes, all your co-pays, deductibles, crutches, band-aids, etc are all deductible when paid from taxable dollars. See About Publication 502, Medical and Dental Expenses for a complete list of deductible items. 

3. Some portion -if not all- would be deductible. There is a section on in-home care in Pub 502 so read through that section as well.

Side note: medical expenses are part of itemized deductions. You may itemize on CA even if you don't on federal.

Best wishes for a full recovery!