Is short/long term disability payment taxable?

[Hal_Al · Accepted solution]

It depends. If you get a tax document (W-2 [box 1] or 1099-R) for the payment, it's taxable.

The rule is if you paid the insurance premium, with after tax money, the disability benefit is tax free. If your employer paid the premium (as in most cases) or you paid the premium with pre-tax money, the benefit is taxable.

[jimc]

What about in Ohio, as ORC 5447.01 (4) seems to unambiguously declare "disability benefits" are to be deducted from taxable income.

[Hal_Al]

That come up in the state interview. Even though it was taxable on the federal return (and included in your federal AGI), you deduct it on line 31 of schedule A of the Ohio return.

On the page in the Ohio software, titled "Here's the income Ohio handles differently"; scroll down to:
  -Miscellaneous
   -Disability or Survivors benefits
    -Click START or Update to enter the deduction

[kbeckley785]

what does it mean if my W-2 for my KPERS Long-Term disability benefits (KS) has federal wages entered, but no state wages entered.   The state wages and withholding are empty.

[Hal_Al]

It means two things: 1. your employer did not withhold any state tax and 2. It's common for employers to leave boxes 15-17 blank when there state withholding.
It does not mean the income is not subject to state tax. That will be determined in the state portion of the TurboTax interview. OH does not tax disability. I don't know about KS