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kboyd1
New Member

I had cancer last year and took a leave of absence from my job and applied for state disability. Do I need to declare that money from disability to my federal taxes?

 
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2 Replies

I had cancer last year and took a leave of absence from my job and applied for state disability. Do I need to declare that money from disability to my federal taxes?

You have not mentioned what state you are in, or what sort of document the disability you received will be reported on.   In general, all of your income needs to be entered on your federal tax return.   The software will use the current tax laws and calculate whether it is taxable or not.

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**

I had cancer last year and took a leave of absence from my job and applied for state disability. Do I need to declare that money from disability to my federal taxes?

Generally speaking, if you pay for disability insurance with after-tax money, such as a private policy, then disability payouts are not taxable. However, if you never paid tax on the premiums (such as because they were deducted from your paycheck pretax or because the premiums were covered by your state) then the disability payouts will be considered taxable income.

 

Furthermore, disability payments for the first year of disability are considered earned income and are supposed to be subject to Social Security and Medicare tax withholding. After one year, continued disability payments are not subject to Social Security and Medicare tax withholding.

 

I would expect you to get a W-2 or a 1099G from the disability payer.  If we are talking about payments in 2022, the W-2 or 1099 would be mailed to you by January 31, 2023. If we are talking about 2021 disability payments, then you should have received a tax statement earlier this year, you may be able to go online with the disability payer and get a copy.

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