I am offered a settlement on my long term disability of $86,700.00. My question is how much will this effect my taxes next year? everything else will stay the same.
Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
Announcements
TurboTax has you covered during Covid. Get the latest stimulus info here.
cancel
Showing results for 
Search instead for 
Did you mean: 
rugar29
New Member

I am offered a settlement on my long term disability of $86,700.00. My question is how much will this effect my taxes next year? everything else will stay the same.

 
1 Reply
Melaine
New Member

I am offered a settlement on my long term disability of $86,700.00. My question is how much will this effect my taxes next year? everything else will stay the same.

It depends.  If you had a group policy that was paid for by your employer or by pre-tax payroll deduction, then the benefits are taxable and you would add to your income, thus increasing your taxable income.  If, however, the policy was an individual policy purchased by you (or a group policy) and the premiums were paid for with after tax funds, then the benefits would not be subject to federal income tax and there would be no effect to your taxable income.  Please see more on the question as answered by the IRS; Life Insurance Disability Insurance Proceeds


Dynamic AdsDynamic Ads
v
Privacy Settings