Income taxes

[FernPM--]

Won judgment of back disability insurance. Some of it (6 months) from last year and 3 months from this year. 1/3 I had to pay back to the attorney. How do I figure out what to do to pay income taxes on the amount so that I am not stuck paying when I do my taxes? Only 832.00 was kept out of the $32,000.00 gross amount.

[melj1]

Hi 

The good news is that payments to compensate for bodily injury are generally not taxable forms of income. While most things are taxed today, disability payments generally are not. This is because disability payments are meant to compensate for a loss and are not considered income, such as wages, salaries or tips  The attorney fess would not be deductible as well.

Mel

[FernPM--]

Unfortunately, these payments aren't disability payments, they are disability INSURANCE payments and I receive a W-2 on them at the end of the year, so I am responsible for taxes. Taking that into account, please reconsider my original question.  Much appreciated, Mel.  🙂

[ReshmaRT]

Hello FernPM,

Depending on the type of disability benefits you received, they may or may not be taxable. Here are some common reasons why you may have received back disability insurance payments, and how these payments are taxed:

Scenario A - Disability paid by an insurance company for things like lost wages, loss of limb, or loss of sight:
1) If your employer paid the premiums, and the premiums were not included in your taxable income - then the disability payment you receive is taxable to you;
2)  If you and your employer jointly paid the premiums - then only the disability amount covered by your employer's payments is taxable to you;
3) If you paid the premiums out of your own pocket, or with payroll deductions that came out of your after-tax income - then the disability payment you receive is not taxable to you.

Scenario B - Disability benefits for loss of income or earning capability resulting from injuries under a no-fault auto insurance policy - not taxable to you.

For these and other types of disability payments from the VA, Social Security, Worker's Comp, etc. please see the following link:
https://ttlc.intuit.com/turbotax-support/en-us/help-article/medical-tax-credits-deductions/disabilit....

Please let us know if this answers your question, or if you need further assistance. Thank you for using Ask the Experts!

[Kelly Thomas C · Accepted solution]

You can simply send a check to the IRS to make an estimated tax payment. Make sure you write your social security number ON THE CHECK and the TAX YEAR to which you want the payment to apply. Alternatively, you can make payments electronically to IRS https://www.irs.gov/payments. Set up an account there an make one or more payments.

Thank you for being a TurboTax customer!!

Kelly C, CPA