Hi Guys
I was wondering if anybody has worked on this issue. The state disability offset issue refers to those states who offer disability benefits to its residents. It means that if employee is on short term disability, he will get some money from the employer as some money from his resident state.
Suppose My X is working in CT but a resident of the state of NJ. He went on full STD on May 1st. So as per the norm, the employee will get part of money from employer in CT and part of money from Dept of Labor in NJ.
Suppose the employeeu2019s salary is $ 2000.00 per pay cycle. So if on STD, this employee will get say $1600.00 from employer and rest say $400.00 from state of NJ. This state plan disability benefit of $ 400.00 is considered as taxable wage. Accordingly this wage is subject to social security, medicare & FUTA taxes.
The state deducts the workers social security and medicare contributions on the taxable portion of benefit paid as well as federal tax amount requested by employee. The amount withheld, are deposited with the IRS. The employer is responsible for the payment to the federal govt of employer FICA contributions on the taxable portion of paid benefit and for the inclusion of the total of those taxable benefit payments on employeeu2019s W-2 statement.
Any idea or suggestion on this, how this can be handled?
Appreciate your help.
Thanks
W