How to Deduct SDI on Schedule A

SDI, or state disability insurance, is a state program that pays benefits to employees who become disabled as a result of a work-related injury. Only a few states offer SDI, including California, New York, Rhode Island, Washington and New Jersey. Some states require only the employer to contribute to the fund while other states require both the employee and the employer to contribute. If your state requires employees to contribute to the insurance fund and you itemize your deductions, you can take a deduction for the contribution on your federal income taxes.

Step 1

Download Schedule A from the Internal Revenue Service website.

Step 2

Refer to Box 14 on your W-2 to determine your SDI contribution for the year. If you worked for more than one employer, add all your contributions together to arrive at your total contribution.

Step 3

Enter your total SDI contributions in the line labeled “State and Local” in the Taxes You Paid section on Schedule A. As of the 2012 tax year, this is Line 5.

Step 4

Check the “Income Taxes” box on the next line.

Step 5

Complete Schedule A. Include any other deductions, which might include medical and dental expenses, mortgage insurance and donations to charity.

Step 6

Transfer the total amount of your itemized deductions to the line labeled “Itemized Deductions or Your Standard Deduction” on Form 1040.

Step 7

Complete Form 1040 to determine whether you owe income taxes to the IRS or will receive a refund.

Items you will need

  • Form W-2
  • Form 1040

Tip

  • You can also include any other state income taxes paid on Line 5 on Schedule A.

About the Author

Angela M. Wheeland specializes in topics related to taxation, technology, gaming and criminal law. She has contributed to several websites and serves as the lead content editor for a construction-related website. Wheeland holds an Associate of Arts in accounting and criminal justice. She has owned and operated her own income tax-preparation business since 2006.

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