topic Re: Disability in Get your taxes done using TurboTax

Disability

Jtaxesforu — Tue, 10 Mar 2026 07:10:12 GMT

Hi. I’ve been receiving disability for 9 months 2022 for chemo treatments. The disability payments are coming from my employer plan, Prudential. Should I prepare myself for paying taxes on the disability payments I’ve been receiving?

Re: Disability

xmasbaby0 — Wed, 02 Nov 2022 16:08:14 GMT

Did you pay for the disability insurance by having anything withheld from your paychecks--or was it all paid by the employer?

Disability Income

https://ttlc.intuit.com/questions/1901145-is-disability-income-taxable

Re: Disability

Jtaxesforu — Wed, 02 Nov 2022 16:19:48 GMT

I don’t rethink I paid for the disability insurance. My employer did. The disability is through Prudential but I have paid into SDI since the 70’s but my employer uses Prudential.

Re: Disability

xmasbaby0 — Wed, 02 Nov 2022 16:32:28 GMT

It sounds like you are receiving disability benefits that were paid for by your employer---unless you also paid for that insurance through payroll deductions. So it will be taxable income. If the payments are from Prudential they have nothing to do with Social Security disability. The money that has been withheld from your pay for Social Security has nothing to do with the disability benefits you receive from Prudential. If you were receiving Social Security disability benefits, they would be paid from Social Security--not Prudential. Check with your employer if you are not sure if you have been paying for part of the disability insurance with them. Sometimes the employee pays part and the employer pays part. If that is the case, then only the "employer" portion of the benefits would be taxable.

Re: Disability

Jtaxesforu — Wed, 02 Nov 2022 16:37:56 GMT

I did not pay for the disability insurance. My employer did. The disability is through Prudential but I have paid into SDI since the 70’s but my employer uses Prudential.

Re: Disability

xmasbaby0 — Wed, 02 Nov 2022 16:45:21 GMT

Yes----everyone pays into Social Security. Again....Social Security has nothing to do with your situation right now. Since you did not pay the premiums for the disability, then the benefits you are receiving will be taxable income. They will either be included on your W-2 from your employer, or you might get a separate tax document for the disability in January or early February. Your employer ought to be able to tell you what sort of form to watch for. It might be a W-2 from Prudential or it might be something else like a 1099.

Wishing you a full recovery!

Re: Disability

Jtaxesforu — Wed, 02 Nov 2022 16:58:22 GMT

Okay. Thanks for the information. To make it a bit more complicated my employer wants me to apply for SDI and pay back Prudential. My employee referred me to a company called “Allsup” to start the SDI. I’m wondering how this will effect my tax bill. I’m so confused. I guess SDI will pay a lump sum, then I pay back Prudential and how does this effect taxes?

Re: Disability

xmasbaby0 — Wed, 02 Nov 2022 17:17:46 GMT

This gets complicated. It can be very difficult to be approved for Social Security disability---that can take a long time. But if you have the strength of an attorney or help from the disability payor, sometimes they can fast track the SSDI. If and when SS pays out a lump sum, you may have to use some of that lump amount to repay Prudential. Going forward, if SS is your only income it is not taxable.

Someone else in the forum may have more knowledge than I do regarding how they transition you from employer paid disability to Social Security disability.

@Critter-3 @Opus 17 @DoninGA @rjs @Mike9241 ?????

Re: Disability

Jtaxesforu — Wed, 02 Nov 2022 17:22:58 GMT

Okay thank you. I wish I had the option of filing for SDI at the beginning of this cancer journey because I’ve been laying into it since the 70s and now I have a tax bill with the Prudential payments . I hope I don’t have to pay a lot. So far the payments are at 39k

Re: Disability

xmasbaby0 — Wed, 02 Nov 2022 17:31:17 GMT

Getting Social Security disability can be extremely difficult and there is a minimum five month wait before you see a dime. I know this because I have recently gone through getting SSDI for my own stage 4 brother. It has been an uphill battle for months. He will finally begin to see payments next year ---he has had zero income since June. You are receiving income right now----that is a good thing. It may get complicated, but it can be sorted out.

Re: Disability

Jtaxesforu — Wed, 02 Nov 2022 17:46:06 GMT

Okay. Thank you @xmasbaby0 for the confirmation and keeping my overthinking brain in good check. I have been receiving payments from Prudential and my medical on cobra and I am very grateful. I will wait to see how much I have to pay on the taxes. It’s scary not knowing how much tax you will need to pay. I wish cancer patients had some type of relief.

Re: Disability

rjs — Wed, 02 Nov 2022 17:52:35 GMT

SDI is not Social Security. Social Security disability is often referred to as SSDI. SDI and SSDI are not the same thing. SDI is state disability insurance. The details are different for each state. But SDI is for short-term disability, usually only for 6 months. The Prudential plan is probably long-term disability, which is intended to pick up when the short-term state disability ends.

You should also apply for Social Security disability benefits. It might not take so long. Certain diseases and treatments, including certain types of cancer, get automatic approval without a long wait. The Prudential coverage is probably supposed to be only an add-on to what you get from Social Security. It probably requires you to apply for Social Security disability. When you get the Social Security payments you will then have to pay back Prudential for what you got from Social Security.

You should let your employer's HR department guide you through all of this. You should also call Social Security at 800-772-1213 to get information about it.

Social Security disability is taxed the same as Social Security retirement benefits (even if you are nowhere near retirement age). The amount that's taxable depends on your other income. Anywhere from zero to 85% of your Social Security benefits will be taxable. It's never fully taxable. If Social Security is your only income for the year, none of it is taxable.

Re: Disability

daveo12345 — Tue, 04 Feb 2025 22:23:32 GMT

I have found an error in turbotax desktop 2024

after this screen

Enter prior year roth ira contributions

confirm: David net regular contributions prior to 2024 that remain in David's Roth IRA

Roth IRA contributions prior to 2024

i get a conversion and then an excess question....and then...because my contributions were less than the amount i removed <meaning i pulled out earnings>

next i go to the "Let's see if we can reduce your early withdraw penaly"

and i enter the entire amount of the 1099R as related to the disability

THE SYSTEM SHOULD NOT ONLY MAKE THIS PENALY FREE BUT ALSO TAX FREE. THATS EXPLICITY STATED IN THE IRS FORMS ...IF OPEN MORE THAN 5 YEARS AND PERMINANT DISABILITY TAX AND PENALTY FREE BUT YOUR SYSTEM IS CALCULATING TAX AND WAIVING THE PENALTY. WRONG.SEE IRS PUBLICATION WITH THE FLOW CHART.

Re: Disability

daveo12345 — Tue, 04 Feb 2025 23:57:38 GMT

for anyone in the same boat here is the solution

if you go to the 1099R form in form view turbotax, there is a checkbox where you can say "this is marked with distribution code J but it is a qualified distribution"

this seems to work forms 100R and select that check box making the roth distribution tax free