I received a 1099-misc for my short term disability, where does this go on the return? is it taxable income?

[Patrice]

Short term disability (STD) payments can take one of two forms. They can be a taxable wage replacement benefit, or a non-taxable insurance benefit.

Whether a STD benefit is taxable or not depends on who is paying the premium to the insurance company.

There is no easy answer as every circumstance is different and laws vary from state to state. Here are some general guidelines:  

If your employer pays the premium for the disability insurance product, than any payment you receive is taxable to you as a taxable wage replacement payment. The insurance contract is considered to be a "wage replacement" and not a pure insurance payment.

If you, the employee, purchase the insurance product with after tax money, than the payment of the benefit is not taxable income to you. The payments you receive are not considered to be a wage replacement payment.

• Supplemental Security Income (SSI) payments are not taxable under IRS regulations.
• If you receive disability retirement benefits before the age of retirement, these may be taxable.

These are just a few general scenarios, but again, a lot depends on your state and individual circumstances. For this reason, you should enter every tax form (W-2, Form 1099-MISC, Form 1099-R, etc.)  that you receive into TurboTax. TurboTax will calculate the amount of your refund or amounts owed based on this information.

[Seybreezer]

Turbo Tax is treating the 1099 Misc I received for short-term disability as if I have a small business. This does not seem right to me. But I cannot find a way to enter it as income. (My employer pays for the insurance.)

[DoninGA]

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@Seybreezer wrote:

Turbo Tax is treating the 1099 Misc I received for short-term disability as if I have a small business. This does not seem right to me. But I cannot find a way to enter it as income. (My employer pays for the insurance.)

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What box on the 1099-MISC was the disability income entered?

[jamiepelf]

Did anyone ever help you with this? I’m on the same boat. 

[DMarkM1]

Assuming the payments are showing in box 3 "Other Income" on your 1099-Misc, on the "Income & Expenses" tab scroll down to "Other Common Income"

1.  Identify as Short-term disability

2.  Enter as "not your main job"

3.  You didn't do this "to earn money" 

4.  You "received in 2019"  

Following these steps, this should not show up in self-employment.  

[Nray6]

What if the short term disability shows up on box 6, medical payments? The std plan was post tax, amd paid for completely by the employee so I think it should not be included as income. But box 6 is acting as if it were payments for providing medical services! 

[DawnC]

Box 6 of the 1099-MISC - Enter payments of $600 or more made in the course of your trade or business to each physician or other supplier or provider of medical or health care services. Include payments made by medical and health care insurers under health, accident, and sickness insurance programs.   So yes, it is for payments for medical services.   Contact the issuer and get a corrected form if this was for a plan you paid for with post-tax money.  

Temporary disability, such as an injury, serious medical condition, or even pregnancy, can be covered by short-term disability payments obtained through private insurers, and they may be part of an employer's compensation to employees. Whether the payments are taxable depends on how and when they are paid.

As a basic starting point, all income you receive is taxable unless it is expressly exempted. Such exemptions include worker’s compensation payments and certain compensatory damages awarded through litigation. However, short-term disability payments received under an insurance policy are not exempt, though you may not be liable for additional taxes on such payments if you have already borne the cost of taxation through the structure of the plan.

If you and your employer share the cost of a disability plan, you are only liable for taxes on the amount received due to payments made by your employer. So, if you pay the entire cost of a sickness or injury plan with after-tax money, you do not need to report any payments you receive under the plan as income.  

If your employer pays half the cost of premiums and does not deduct these payments from your pay, then you most likely must report half the payments received as income. Reimbursement of medical costs you’ve paid for after the plan was established are generally not taxable, but may reduce the amount of any medical costs deduction.

[Nray6]

We contacted the insurance company and they said they do not keep track of which groups pay their premiums pre- or post- tax. Therefore, they send 1099s to all members that drew STD benefits in 2020. They also said that this should not be an issue as long as you let your CPA know that the amount you received in disability is non-taxable.

Is there a way to input the 1099 in TurboTax as non-taxable since we pay the entire cost with post-tax dollars?  

Thank you. 

[WendyN2]

If you meet the requirements described by DawnC above, and those payments are not taxable, then you can skip reporting the 1099 you've received. There may be an IRS notice asking you to explain why you haven't reported all the income. At that point, you can address that in your response letter to the IRS. If they supply a fax number, I would suggest you send it from a fax machine that gives you an "upon receipt of recipient" receipt to you. Staples machines, I know, do this. If you should choose to mail, I would suggest you send via Certified Mail, Return Receipt Requested. That way you have proof of receipt of filing. 

[ahathaway31]

Isn’t the intent to earn money though. You know your going to earn money when signing up for disability 

[DaveF1006]

In this context, you would say "no" to the questions asking you if you have the intent to make money.  if you answer yes, you will pay self-employment taxes because it assumes you are self-employed.

@ahathaway31