While I was on medical leave, I received part of my income from state disability benefits and the rest from my employer. The state covered 60% of my usual pay, and my employer chipped in the remaining 40% for about three months. Now that I’ve got my W-2, I see the 60% from the state isn’t included in my taxable income.
I saved part of the state disability money assuming I’d need to pay taxes on it. I know exactly how much came from the state versus my employer, but I’m not sure how to report the state disability money if it’s not in my W-2. Is there a specific form I need to file? Any tips would be appreciated. Thanks in advance!
Teal said:
You’ll likely get a 1099-G from the state, which is the form they use for certain payments like disability benefits. Keep an eye out for it.
That makes sense. I guess I’m just waiting for it to arrive then. Thanks for explaining!
@Dakota
Exactly! The state or their third-party administrator should send you a 1099-G. Unless you’re in New Jersey—there they tell your employer how to add those amounts to your W-2. I can’t stand that NJ does this! It doesn’t seem to happen in other states I’ve seen, but it’s worth double-checking.
What state are you in? Whether you’re taxed on the full benefit or just part of it depends on the state. The amount from your employer on your W-2 is definitely taxable, but some of the state-paid disability might not be, especially if you funded the program through payroll deductions.
I’m not 100% sure about other states, though, since my state doesn’t have STD.