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Disability payments received are not reported on your tax return when you have paid for the disability insurance.
I read some replies on the community info...I receive my old salary plus from the Disability Insurance coverage as part of the benefits package. I do remember we were asked before or after-tax...plus we had a choice to add to our salary amount IF we paid which I did. It was only a few dollars. Where can I find out more about whether there is any tax break on this total income or partial amount?
I know we had money withdrawn for insurances on our payroll, what if I paid extra on the premium? Is there a different tax status for % self-paid insurance or is it still considered corp. income?
Basically, if the premiums were paid with taxed dollars, then the benifit payouts are not taxable income to the recipient. However, if the premiums were paid with non-taxed dollars then the payouts are taxable income to the recipient. If taxable, you'll probably receive a 1099-R at tax filing time.
If the payout is not taxable, then box 2 of the 1099-R will show the taxable amount as zero, or will have the "taxable amount undetermined" box checked.
The best way to get your answer is to ask the people who are paying out the money ... ask your employer and the insurance company what tax form will be sent in January (if any) and inquire how much will be taxable.
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