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WA has no income tax but CA does, will my private disability benefits become taxable if I move to Cali?

Los Angeles, CA |

I currently live in Washington State and receive private disability benefits that are non taxable for fed because I paid the premiums post tax out of my paycheck, and there is no state income tax in WA. This leaves my benefits completely non taxable while I'm living in Washington. I'm considering moving to Cali soon where there is a state income tax. Will my benefits become taxable under the Cali tax laws even though I paid the premiums with after tax dollars? If so can I use that tax amount be used as a deduction on my federal tax even though I will have no federal taxable income to claim?
Thank you in advance for your help!

Attorney Answers 4


If they are not taxable for Federal purposes, then they are not taxable for California. However, I am only 95% sure. Call the CA franchise tax board before making a decision at
1-800-852-5711 early in the morning. One problem I have with the facts is you don't say if they are short-term benefit or a long-term benefit.

Let me know how it comes out.

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Disability payments that are received as a result of premiums paid on the policy with after tax dollars are not taxable. An accountant can verify this.

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Here is something found at the following IRS link:,,id=199752,00.html

"Question: I am receiving long-term disability. Is it considered taxable?
Answer: You must report as income any amount you receive for your disability through an accident or health insurance plan paid for by your employer:
1. If both you and your employer have paid the premiums for the plan, only the amount you receive for your disability that is due to your employer’s payments is reported as income.
2. If you pay the entire cost of a health or accident insurance plan, do not include any amounts you receive for your disability as income on your tax return."

As you can see you would seem to fit under #2 and a result the disability payments would not be taxable income to you.

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These benefits should not be taxable in CA. Have a CA tax professional review your particular situation before you move to make sure.

Any individual seeking legal advice for their own situation should retain their own legal counsel as this response provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency.

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