What Is CASDI on My Paycheck and Why Is It Deducted?
Understand CASDI deductions on your paycheck, their purpose, calculation, and how they impact your earnings and potential exemptions.
Understanding the various deductions on your paycheck can be perplexing, especially when encountering acronyms like CASDI. This deduction often leaves employees questioning its purpose and impact on their take-home pay.
Grasping why CASDI is deducted is crucial for financial awareness. Let’s explore what CASDI stands for and its financial implications.
Purpose of This State Deduction
The California State Disability Insurance (CASDI) deduction funds the Disability Insurance (DI) and Paid Family Leave (PFL) programs. These programs offer partial wage replacement to workers unable to work due to non-work-related illnesses, injuries, or pregnancy. They also support individuals taking time off to care for a seriously ill family member or bond with a new child.
The CASDI deduction is calculated as a percentage of an employee’s wages, with the annual rate set by the California Employment Development Department (EDD). For 2024, the contribution rate is 1.1% of an employee’s first $153,164 in wages, capping the annual contribution at $1,684.80. This automatic deduction ensures the fund remains solvent.
Basic Deduction Formula
The CASDI deduction is calculated by applying the contribution rate to an employee’s gross wages. For 2024, this rate is 1.1%, applied to wages up to $153,164. For example, if an employee earns $100,000 in a year, the CASDI deduction would be $1,100. Once wages exceed the $153,164 threshold, no further CASDI contributions are required, capping the deduction at $1,684.80 annually.
Payroll systems typically handle these calculations automatically, but employers should conduct regular audits to ensure deductions align with current rates and wage limits.
The Role of Employers
Employers are responsible for withholding CASDI deductions and remitting the funds to the state. They must inform employees about their rights and benefits under the DI and PFL programs, including how to file claims and what documentation is needed. Staying updated on changes to contribution rates or wage base limits is essential to maintain compliance.
Employers also play a key role in facilitating claims by verifying employment details and providing necessary documentation. This cooperation ensures employees receive timely benefits, reducing financial stress during periods of disability or family leave.
Reasons Your Pay Stub Might Vary
Pay stub variations can result from changes in tax withholding, often influenced by updates to your W-4 form. Adjusting filing status or claimed allowances can affect federal and state tax withholdings. Fluctuations in income, such as bonuses or overtime, can also trigger changes in withholding brackets.
Benefit contributions can also impact your paycheck. Modifying health insurance plans, increasing retirement contributions, or participating in flexible spending accounts (FSAs) or health savings accounts (HSAs) will reflect in your deductions, as pre-tax contributions reduce taxable income.
How to Verify the Deduction
To ensure CASDI deductions are accurate, review your pay stub. Locate the “CASDI” line item and cross-reference the amount deducted with your gross wages and the current CASDI rate. For 2024, the rate is 1.1% of wages up to $153,164. For instance, if your gross earnings for the pay period are $5,000, the CASDI deduction should be $55.
Consult your employer’s payroll department for further verification. Employers are required to maintain detailed records of deductions and can provide a breakdown of how the CASDI amount was calculated. Additionally, compare your year-to-date CASDI contributions on your pay stub with your W-2 form, where total contributions are listed in Box 14. If discrepancies arise, contact the EDD directly to address potential errors or overpayments.
Potential Exemptions or Adjustments
While CASDI is mandatory for most California employees, certain exemptions or adjustments may apply. Employees working for specific organizations, such as religious groups or non-profits, may be exempt if their employer offers an equivalent private disability insurance plan that meets or exceeds CASDI benefits.
For individuals with multiple jobs, CASDI contributions are capped annually at $1,684.80 for 2024. If multiple employers deduct CASDI, employees may exceed this limit. In such cases, they can file for a refund of the overpaid amount by submitting a DE 938P form with supporting documentation to the EDD.
Self-employed individuals can opt into the program through the EDD’s Disability Insurance Elective Coverage (DIEC). This allows them to access the same benefits as traditional employees, though the contribution rate and process differ slightly. Self-employed workers should weigh the cost of contributions against potential benefits, particularly if their income fluctuates significantly.