The California Voluntary Plan for Disability Insurance (VPDI) is not deductible on the federal tax return. Under IRS Rev. Rul. 81-194, VPDI withholdings are treated as personal expenses and cannot be claimed as an itemized deduction on Schedule A.
When you enter VPDI amounts from your Form W-2, box 14 in TaxAct, the information is transferred to the state worksheet for California SDI/VPDI tracking. This ensures the amounts are handled correctly for both federal and state rules.
Beginning in tax year 2024, California eliminated the SDI wage limit, which means employees can no longer have excess SDI or VPDI withheld when working for multiple employers. As a result, the refund for excess SDI/VPDI is no longer available.
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