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.
Download Schedule A from the Internal Revenue Service website.
Step 2Refer 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 3Enter 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 4Check the “Income Taxes” box on the next line.
Step 5Complete Schedule A. Include any other deductions, which might include medical and dental expenses, mortgage insurance and donations to charity.
Step 6Transfer the total amount of your itemized deductions to the line labeled “Itemized Deductions or Your Standard Deduction” on Form 1040.
Step 7Complete Form 1040 to determine whether you owe income taxes to the IRS or will receive a refund.
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- You can also include any other state income taxes paid on Line 5 on Schedule A.
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