Paperwork seems to magically pile up when you’re a small business owner, especially when it comes to taxes (and then even further compounded if you live in California). One tricky thing that tends to trip up small businesses in California is CASDI, sometimes spelled CA-SDI, which stands for California State Disability Insurance. Whether you’ve got employees wondering whether or not they qualify and how it works, or you’re interested yourself, here’s everything you need to know if you find yourself wondering “What is CASDI?”.
What is CASDI on the W2 form and how does it work?
As noted above, CASDI is shorthand for California’s state disability insurance. As the California Employment Development Department’s website explains, “the California State Disability Insurance (SDI) program provides short-term Disability Insurance (DI) and Paid Family Leave (PFL) wage replacement benefits to eligible workers who need time off work.” Employers are responsible for withholding SDI payroll taxes from their employees’ paychecks.
When a worker qualifies for CASDI, the Employment Development Department will determine how much you’ll get each week based on what’s called a base period. The base period is one year (12 months) and is divided into four quarters comprised of three months each. An individual’s base period is based wages earned between five and 18 months before the disability claim was made.
What is the SDI rate for 2018?
Like most government processes, the SDI rate in California changes each year. In 2018, the SDI Withholding Rate was one percent and the taxable wage limit was $114,967 per employee for the calendar year and the maximum amount withheld per employee was $1,149.67. While the 2019 rates haven’t been released yet, they’re expected to be shared in this month.
Who is eligible for CASDI?
Shortly after wondering “what is CASDI?” most people’s follow up question is “who is eligible for CASDI?” While the California government encourages employees to apply for CASDI whether or not they’re sure if they are eligible, there are several requirements that employees must meet in order to be eligible for CASDI. Some of the central ones include:
- Most importantly, the person applying for CASDI must be unable to perform their regular work for at least eight consecutive days
- They must be working or actively looking for work at the time of application
- Employed individuals must have lost wages because of their disability
- They must have earned at least $300 in wages from which CASDI was withheld during the previous period (referenced above in base periods)
- Applicants must be under the care of a licensed physician, practitioner, or accredited religious practitioner during the first eight days of their disability
- The claim has to be made within 49 days of the date the disability started
- The applicant’s physician or practitioner has to complete a medical certification of the disability
Do I have to report SDI on my taxes?
Maybe, but probably not. In California, these disability benefits are generally not taxable. The typical exception to this is when they are considered a substitution for unemployment compensation, and the employee is ineligible for unemployment insurance due specifically to his or her disability. However, unless you have a 1099-G form that states that your benefits are taxable, you can generally assume that they’re not and exclude them from your reporting.