When are SDI State Disability & Long Term Disability benefits included as

taxable compensation for MAGI Income – Covered CA Subsidies

Your DI benefits are taxable only if you receive DI benefits in place of UI Unemployment Insurance benefits. In this case, your DI benefits are considered a substitution for your UI benefits, which are taxable.  Federal Tax Regulation Section 1.85-1

Thus, if you can’t  work because of a disability and receive disability benefits, those benefits are not taxable.

Learn More ⇒  edd.ca.gov/

2 comments on “SDI State Disability Benefits Taxable?

  1. I was told by covered California that they only count the AGI when you are self employed we have a pension and are on Social Security disability is only part of that taxable covered California considers it all taxable amount because they say they are considering the whole thing. I thought they only went by your adjusted gross income no matter whether your self employed disabled or working

    • I’m on vacation, so I can’t give you all the details and links. Please use the menu above and find the definition of MAGI income. It’s not the same as AGI line 37, there are things like Social Security that get added back in. See the menu here:

      https://taxcredits.healthreformquotes.com/quotes-subsidy-tax-credits/magi-modified-adjusted-gross-income-line-37/magi-faqs/

      And see what the treatment is for Social Security payments and pensions.

      If you send me a private email with all your tax documents, I can review them on the 30th when I’m back in town.

      You can also go into your Covered CA account and appoint us as your agent, no extra charge, so that we get paid to help you. Along with authoritative answers and citations to the law or actual insurance company rules.

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