VPDI on a W-2 stands for Voluntary Plan for Disability Insurance. Despite the term "voluntary," it is generally not optional for employees in California who are covered by a private disability insurance plan approved by the state instead of the standard State Disability Insurance (SDI) program
What is VPDI?
- VPDI is a private disability insurance plan that employers may offer as an alternative to California's state-run SDI program.
- It provides disability benefits such as partial wage replacement for employees who are unable to work due to injury, illness, maternity leave, or family medical leave
- Employers and employees contribute to VPDI similarly to SDI, typically around 1% of wages
VPDI on the W-2 Form
- VPDI contributions appear in Box 14 of the W-2 form, often labeled as "VPDI" or "VDI" (Voluntary Disability Insurance)
- When filing taxes, the VPDI amount should be entered on the Wages-W-2-Other Information screen in tax software, which transfers it to the Excess SDI/VPDI Withheld Worksheet
- If multiple employers withheld SDI/VPDI and the total exceeds the annual limit, the excess can be claimed on the California state tax return (Form 540, Line 74 or Form 540NR, Line 84)
Tax Implications
- VPDI contributions are not deductible on federal tax returns (Schedule A, Form 1040)
- Some taxpayers may be eligible for a credit if they had multiple California employers and wages exceeding certain thresholds
- Disability benefits received under VPDI are generally not taxable unless reported on Form 1099-G, which indicates taxable amounts
Summary
Aspect| Details
---|---
Full Name| Voluntary Plan for Disability Insurance (VPDI)
Purpose| Provides disability benefits as an alternative to California State
Disability Insurance
W-2 Box| Box 14, labeled as VPDI or VDI
Federal Tax Deductibility| Not deductible on federal tax returns
State Tax Reporting| Excess contributions can be claimed on California state
tax return
Contribution Rate| Approximately 1% of employee wages
In essence, VPDI on your W-2 indicates contributions to a private disability insurance plan in California, reported for state tax purposes but not deductible on federal returns
