Taxes on My Metlife Disability Insurance

[teddyhoward1968]

Hi all,

My question is this.  I started receiving Long Term Disability Insurance payments from MetLife on Behalf of American Express in March of this year (2023).  I was paying my own premiums since I joining American Express in 1998 (Long Term Disability, Supplemental Long Term and Extended Long Term in 2017).  In 2022 post covid American Express started paying for all employees Long Term Disability Insurance).  Now for the fun part.  Based on the IRS rule that states that only portions of what the employer paid is taxable, how would I estimate my taxes due for 2023 based on my payments for LTD over 24 years and SLTD and ELTD for the past 6 years?

Any help you can provide would be great.

[Anonymous_]

I will page  @dmertz 

[TomD8]

I believe this IRS ruling addresses your situation:

"Under the Amended Plan, long-term disability benefits received by an employee who has irrevocably elected, prior to the beginning of the plan year, to have the coverage paid by the Employer on an after-tax basis for the plan year in which the employee becomes disabled are attributable solely to after-tax employee contributions and are excludable from the employee’s gross income under § 104(a)(3).

Under the Amended Plan, long-term disability benefits received by an employee whose coverage is paid by the Employer on a pre-tax basis for the plan year in which the employee becomes disabled are attributable solely to pre-tax Employer contributions and are includible in the employee’s gross income under § 105(a).

These holdings are equally applicable to short-term disability benefits."

https://www.irs.gov/irb/2004-26_IRB#RR-2004-55

"After tax" = the premiums paid by your employer were included in your taxable income

"Pre-tax" = the premiums paid by your employer were not included in your taxable income