LTD W2 tax reporting - stuck on what to report

[User2000]

My employer and I contributed into the company's LTD plan with Metlife.  I paid for 17% of income with after-tax salary and my company contributed to 50% of income as a pre-tax payment.   I am now on LTD and Metlife Insurance sent me a W2 showing all the LTD payment as subject to tax withholding.

IRS guidance says "If both you and your employer have paid the premiums for the plan, only the amount you receive for your disability that's due to your employer's payments is reported as income."

https://www.irs.gov/faqs/interest-dividends-other-types-of-income/life-insurance-disability-insuranc... 

Metlife says that all the LTD payment is subject to tax withholding which is why it all shows on the W2, but that is inconsistent with IRS guidance.  

Please what should I put in my tax return and how do I enter this into Turbotax?

[DavidD66]

You are correct that if you paid your part of the premiums with after-tax funds, then that part of your benefits are not subject to income tax.  That said, you don't have any choices for how to enter your W-2.  You have to enter it as it is.  If you are sure you paid your share of the premiums with after tax dollars, and the amount on the W-2 in Box 1 includes the portion of the benefits that were attributable to your pre-tax contributions, then you will have to go back to MetLife and have them issue a corrected W-2.  You may want to enlist the help of your company's HR department to get them to take the necessary action.  Your choices for filing your tax return are:

1. Wait until the issue is resolved to file your tax return.  You may need to file an extension if the issue is not resolved by April 15.
2. File your return now and then file an amended return when you you receive a corrected Form W-2.
3. File your return now and do nothing else.