topic Disability payment tax-free? in Get your taxes done using TurboTax

Disability payment tax-free?

GalSal1 — Tue, 04 Jun 2019 19:24:29 GMT

If I am getting a disability lump sum payment for a previous year and I own a small business and will be filing income under my business name and EIN, will this disability payment be tax-free, as it will be my only "personal" income this year?

Describe the "small business" ... do you file a Sch C or...

Critter — Tue, 04 Jun 2019 19:24:31 GMT

Describe the "small business" ... do you file a Sch C or an 1120 ?

Who pays you the disability pay? It matters. Not all disa...

Carl — Tue, 04 Jun 2019 19:24:32 GMT

Who pays you the disability pay? It matters. Not all disability pay is tax free. If you are a veteran and get disability pay from the veterans administration, then that is not taxable or reportable on any tax return.

https://ttlc.intuit.com/questions/1901145-is-disability-income-taxable">https://ttlc.intuit.com/questions/1901145-is-disability-income-taxable</a>

Disability insurance. The deductibility of these premiums...

Anonymous — Tue, 04 Jun 2019 19:24:35 GMT

Disability insurance. The deductibility of these premiums, is complicated. The IRS permits self-employed taxpayers to deduct "overhead insurance that pays for business overhead expenses you have during long periods of disability caused by your injury or sickness." However, "you cannot deduct premiums for a policy that pays for lost earnings due to sickness and disability." Check with your accountant or other tax advisor to make sure any deductions you take meet IRS requirements.

Also note: If you deduct the premium, any benefits paid from the policy will be considered taxable income. By contrast, policy benefits will not be taxable if you do not deduct the premium, and some taxpayers use this arrangement so that they can receive tax-free benefits if they become disabled. Benefits are also taxable if your employer paid for your disability insurance, rather than if you bought it yourself with your own after-tax dollars.

Read more: Insurance-based Tax Deductions You May Be Missing | Investopedia https://www.investopedia.com/articles/tax/09/personal-business-tax-tips.asp#ixzz5WOT7KuHC