California Excess VPDI

[jerry]

Lacerte is not properly calculating Excess SDI/VPDI  on CA540, line 74, when an employee has 2 jobs and at least one of them has VPDI.

As a workaround, you can put them in as SDI, and Lacerte properly calculates the excess.  Then you can change them back to VPDI.

[Just-Lisa-Now-]

removed

[George4Tacks]

This does seem to be working properly. SDI is in Screen 10 as code 15, and VPDI as code 41.  Be sure that both w-2's are coded to TP or to SP. 

To see codes, right click the dark gray bar that shows the screen # and select "show codes"

[jerry]

Many of us using Lacerte don't use codes.  I don't...

These are inputs coming in from SurePrep's 1040Scan, but they sure look OK on the input screens.  I've even deleted them and re-typed.  But they don't calculate correctly unless I first put them on SDI and then move them back.

[abctax55]

V PDI and S DI  aren't the same thing... the V = voluntary.

Perhaps this will help:

IRS Rev. Rul 81-194, and that ruling by the IRS specifically states that such employee withholding payments to California voluntary plans are NOT tax deductible.

[Just-Lisa-Now-]

Anna, I had this posted earlier but I removed it....I wasnt sure if the VPDI got included in the max, and excess could be refunded like SDI.

[jerry]

Of course SDI and VPDI are different.

However, the total amount one pays into California disability insurance (whether SDI or VPDI) is still limited to the annual SDI limit.  With 2 or more jobs, the limit is frequently exceeded.  When this happens, the excess paid into all CA disability insurance plans is credited on Line 74, just like excess SS from multiple jobs is credited on Federal.

Here are the instructions from FTB on Line 74:  

Line 74 – Excess California SDI (or VPDI) Withheld

You may claim a credit for excess State Disability Insurance (SDI) or Voluntary Plan Disability Insurance (VPDI) if you meet all of the following conditions:

• You had two or more California employers during 2019.
• You received more than $118,371 in gross wages from California sources.
• The amounts of SDI (or VPDI) withheld appear on your Form(s) W-2. Be sure to attach your Form(s) W-2 to the lower front of your Form 540.

They key here is whether Lacerte is properly calculating this excess.  With 2 taxpayers so far, I have found that it wasn't without my workaround.  The fact that the workaround "works" tells me that Lacerte knows about excess SDI + VPDI, but has a bug somewhere.

[George4Tacks]

I realize most do not use codes, but knowing they are there can be helpful. You need to be sure that the SDI for job 1 is entered as SDI and the VPDI for job 2 is entered as VPDI. See the image for the two entry points.

This will create the overpayment of SDI credit on the 540. It will add the SDI to State Tax Paid on Schedule A, but not add it for VPDI. Putting both as SDI will likely elicit a letter from FTB about an error on the return, since as previous pointed out these are definitely two different flavors of the same thing.

You should not be hunting for a fix. IT AIN'T BROKEN..

[George4Tacks]

@jerry This sounds like it could be a problem with input from Sure Prep Scan. Look carefully at the input generated. I am certain it is not a Lacerte problem. My guess is that SurePrep is just sticking VPDI in a black hole input and NOT in the appropriate box for VPDI. I would also virtue a guess that it screws up Union Dues in box 14.