One of DD’s employers listed state income tax withheld under section 14 of w2 as CA SDI with nothing in section 17 (state income tax). TurboTax doesn’t seem to include section 14 in the amount of state tax withheld. Should DD request a corrected W2 or just move it to the section 17 in TurboTax?
What is on her last pay stub from December? Are you sure she has zero CA SDI withheld and only CA income tax? The two are not interchangeable.
CA SDI is 1% of income with no exemption (on up to $118K of earnings). So it will be incurred on the first dollar of income, whereas students won’t necessarily exceed the CA standard deduction of $4401 and therefore may not have any state income tax withheld (especially if she filed the forms to not have tax withheld).
It sounds like the W-2 is correct, but the SDI won’t be refundable.
Turbo Tax (and other tax programs) is supposed to recognize CASDI in box 14 as an amount to be included in state income tax that may be deductible for federal income tax purposes (or at least ask the user if an unrecognized box 14 amount is encountered). She may want to hand check the state income tax deduction amount on the federal income tax return to see that it is the sum of all state income taxes including the CASDI.
Note 1: It may not matter if the state and local tax deduction is already capped, or alternative minimum tax is due.
Note 2: Some employers buy short term disability from a private source instead. But the amount for this is not deductible as a state and local tax.
“Turbo Tax (and other tax programs) is supposed to recognize CASDI in box 14 as an amount to be included in state income tax that may be deductible for federal income tax purposes”
It does, but I thought OP believed it ought to be refundable from CA (like any withheld CA state income tax would be) for a student who didn’t exceed the CA standard deduction. Unfortunately that’s not the case.
Thank you everyone. The SDI withheld was exactly 1% of the total earnings. The question remains why no state income tax was taken, but it might be overlooked on DD side when she completed W4 even though she has completed a good number of those and never made mistake in the past. Nevertheless it seems that it’s a SDI and not state income tax in box 14. Thank you for your help.
California has a separate DE-4 form to set withholding.
If no state income tax was withheld, perhaps she marked that she would be exempt (typically for low income)?