The Notice of Disability Benefits Charged or Credited
The purpose of the Notice of Disability Benefits Charged or Credited (form DS-7C), is to inform you, the employer, that benefit payments have been charged to your disability experience rating account.
You will receive this notice each time State Disability Insurance benefit payments are made to your employee(s). The notice is mailed to the you on the same day that the employee’s payment posts.
The report lists the following:
- Employee’s name
- Social Security number
- Date the disability claim began
- Period-ending date that the payment represents
- Amount charged to the employer’s disability experience rating account
- Taxable amount of Federal Insurance Contributions Act (FICA)
- Taxable amount of federal income tax (FIT)
- Employee’s FICA tax
- Employee’s Medicare tax
- Federal tax withheld
- Net amount paid to the worker
State Disability Insurance benefits are considered to be third-party sick pay. Federal law requires that the portion of third-party sick pay which is attributable to the employer’s contribution be considered taxable wages. Accordingly, these wages are subject to Social Security, Medicare and FUTA (federal unemployment) taxes.
We deduct the worker’s Social Security and Medicare contributions on the taxable portion of the benefits paid, as well as federal income tax amounts requested by the worker. The amounts withheld are deposited with the Internal Revenue Service.
If you have reason to believe that any of the listed payments were made improperly, notify the Division of Temporary Disability Insurance's Bureau of State Plan in writing at P.O. Box 387, Trenton NJ 08625-0387 or via fax at 609-984-4138. Be sure to include your explanation, the worker’s name and Social Security number, your business name, and your employer identification number (EIN).
You are responsible for paying the employer FICA and FUTA contributions on the taxable portion of paid benefits, and for reporting the total of those taxable benefit payments on each worker’s annual W-2 earnings statement.
Tip: It may be a good idea to keep a separate file on each employee receiving Temporary Disability Insurance benefits, and adding the DS-7C received from each benefit payment to it. This way you can keep track of the charges per employee for the life of the claim. If you receive a DS-7C with multiple employees listed, make a copy for each employee listed and add it to their separate files.