Is money you receive from california state disability taxable and do you get a form from edd?

[LeeM · Accepted solution]

If you have any taxable benefits, you should receive a Form 1099-G from the California EDD. They are usually mailed out the last week of January.

If you leave work because of a disability and receive disability benefits, those benefits are not reportable for tax purposes.

However, if you are receiving unemployment benefits, become ill or injured, and begin receiving disability benefits; those DI benefits are considered a substitute for UI and are reportable for tax purposes up to your UI maximum benefit amount.

From the California Employment Development Department FAQ, "According to the IRS, disability benefits that are considered a substitute for unemployment are taxable. Federal Tax Regulation Section 1.85-1 states that Disability benefits are considered to be a substitute for Unemployment benefits when paid to an unemployed taxpayer who is not eligible for Unemployment benefits solely because of the disability."

For more information, you can visit the California EDD website at the link below:

http://www.edd.ca.gov/Disability/SDI_FAQ_for_1099G.htm

[TaxUser23]

When I input the disability payments into turbo tax 2022, it taxes me on them and allows no option to explain they're from EDD or otherwise exempt them from taxation. Is there no way to avoid taxation on 2022 EDD disability payments in Turbo Tax other than omitting entry of the funds paid?  

[MonikaK1]

If you received Califonia state disability payments through EDD and they did not issue you a Form 1099-G, then they were not taxable and you should not enter them in your return.

If they did issue you a Form 1099-G, then report the payments.

See here for FAQs regarding California state disability payments from EDD.

In most cases, California Disability Insurance (DI) benefits are not taxable. But, if you are receiving unemployment, but then become ill or injured and begin receiving DI benefits, the DI benefits are considered to be a substitute for unemployment benefits, which are taxable.

If your DI benefits are taxable, you will receive a notice with your first benefit payment. You will receive Form 1099G for your federal return only. The DI benefits are reported to the IRS up to your unemployment maximum benefit amount.

California will subtract any state unemployment/disability income from the state return.