State Disability Insurance Settings

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State Disability Insurance Settings

Background

State Disability Insurance (SDI) only applies if your business is in California, Hawaii, New Jersey, New York, or Rhode Island.  These are programs set up by these states to compensate employees who are unable to work for a period of time.  Here is some state-specific general info:

California: This tax is a flat rate paid by the employee, that includes both disability insurance and paid family leave.  For more info, visit the California Employment Development Development website. Patriot Software calculates SDI taxes. We also deposit and file SDI taxes for Full Service Payroll customers.

Hawaii: This tax is a flat rate paid by the employee.  The employer has the option to deduct up to half of the cost of the tax from the employee.  For more info, visit the Hawaii Disability Compensation Division website.  In Hawaii, Patriot Software only calculates and deducts the full allowable amount from employee earnings, but not the employer amount.  For Full Service Payroll, we do not collect and remit Hawaii SDI taxes.  This is because SDI in Hawaii is offered through private insurance, not a state taxing agency.

New Jersey: Your SDI tax rate is based on your company’s experience.  For more info, visit the New Jersey State Disability Benefits website.  Also see our more detailed help article State Disability Insurance Setup in New Jersey.Patriot Software calculates SDI taxes for both the employee and employer. We also deposit and file SDI taxes for Full Service Payroll customers.

New York: Employers have the option to deduct a portion of the cost of the tax from the employee, up to 0.5% of their wages.  For more info, see the New York State Insurance Fund Disability Benefits website.  Patriot Software only calculates the NY SDI tax, but for Full Service Payroll, we do not collect or remit New York SDI taxes, due to being offered through private insurance.

Rhode Island: Temporary Disability Insurance (TDI) is funded entirely by employee payroll deductions.  For more info, see the Rhode Island Temporary Disability Insurance website. Patriot Software calculates TDI taxes. We also deposit and file TDI taxes for Full Service Payroll customers.

Setting Up Company Level SDI in Patriot Software

In most cases, you won’t need to change the default settings in Patriot Software.  You only need to change your settings if either your company or an employee is exempt from SDI.

In New Jersey, you will need to enter your SDI tax rate.  See State Disability Insurance Setup in New Jersey.

If your company is exempt from offering SDI to your employees, you will need to mark this on your Tax Exemptions by State page.

  • Settings > Payroll Settings > Tax Exemptions by State
  • On the “SDI” field, choose “Exempt.”
  • Click “Save.”

Setting Up Employee Level SDI in Patriot Software

If an individual employee (not the entire company) is exempt from being covered by SDI, you will need to mark this on the employee’s Advanced Taxes page so the employer tax will not calculate.

  • Payroll > Employees > Employee List > Select Employee Name > Advanced Tax Settings > Edit.
  • On the SDI Exempt field, choose “Exempt.”
  • Click “Save.”

If your company deducts an SDI tax from the employee’s pay that’s different than the standard calculation, you will need to enter the SDI tax rate on the employee’s Taxes page.  Otherwise, leave the “SDI Rate” field blank for the normal employee share of the tax to calculate.

  • Payroll > Employees > Employee List > Select Employee Name > Taxes > Edit
  • Under the “State Withholding” section, in the “SDI Rate” field, enter the tax rate percent the employee will pay.
  • Click “Save.”

 

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