Hello FernPM,
Depending on the type of disability benefits you received, they may or may not be taxable. Here are some common reasons why you may have received back disability insurance payments, and how these payments are taxed:
Scenario A - Disability paid by an insurance company for things like lost wages, loss of limb, or loss of sight:
1) If your employer paid the premiums, and the premiums were not included in your taxable income - then the disability payment you receive is taxable to you;
2) If you and your employer jointly paid the premiums - then only the disability amount covered by your employer's payments is taxable to you;
3) If you paid the premiums out of your own pocket, or with payroll deductions that came out of your after-tax income - then the disability payment you receive is not taxable to you.
Scenario B - Disability benefits for loss of income or earning capability resulting from injuries under a no-fault auto insurance policy - not taxable to you.
For these and other types of disability payments from the VA, Social Security, Worker's Comp, etc. please see the following link:
https://ttlc.intuit.com/turbotax-support/en-us/help-article/medical-tax-credits-deductions/disabilit....
Please let us know if this answers your question, or if you need further assistance. Thank you for using Ask the Experts!
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