See TomD8’s reply above. When I had this issue last year, I verified with the IRS and my accountant that if the premiums were paid with after tax dollars the benefit is not taxable (whether as regular LTD monthly payments or as a lump sum settlement as a settlement of a lawsuit. The monies received from a LTD lawsuit are to be taxed the same as the monies they replaced (normal monthly LTD payments). I would speak to your accountant for piece of mind and have documentation available that proves your premiums were paid with after tax dollars.
