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No Taxes On Disability Insurance?

Unemployment Insurance and Employment Discussion

No Taxes On Disability Insurance?

Postby Garman » Fri Oct 06, 2017 4:19 pm

I just saw a question about unemployment taxes, and this question I've had for a while popped into my head.

I got injured pretty terribly in a motorcycle accident in July of '07.
I got on short-term disability through my employer about a month later (only lasted a few months) and then kicked over to long-term until the end of '08.
One of the first things I asked was why I didn't have to pay taxes on it or file taxes for this income I received in '09.
But I never got a straight answer.
The Hartford just told me "you don't pay taxes on disability money".

Anyone know offhand why disability money isn't a taxable income? (I'm from Wisconsin, if that makes a difference)

Thank you for your input!
Garman
 
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No Taxes On Disability Insurance?

Postby Philibert » Fri Oct 06, 2017 4:37 pm

1
Philibert
 
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No Taxes On Disability Insurance?

Postby clyffton » Sun Oct 08, 2017 6:36 pm

In general, insurance proceeds are not taxable. There was no tax deduction for the premiums, so the income is non-taxable.

Why is this a problem for you?
clyffton
 
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No Taxes On Disability Insurance?

Postby Aviur » Mon Oct 09, 2017 9:52 am

The Hartford just told me "you don't pay taxes on disability money".

That would be correct if you paid the premiums with "after tax" dollars.

That would be incorrect if your employer paid the premiums or if you paid the premiums and took a tax deduction for the premiums such as in a Section 125 cafeteria plan.
Aviur
 
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No Taxes On Disability Insurance?

Postby Cuilean » Mon Oct 09, 2017 10:56 am

If you pay 100% of your premiums for your disability plan, then the disability income is non-taxable.
If your employer pays the premiums or even a partial amount, then the income is taxable.
In your case, you paid 100% of your premiums which is why you did not have to pay tax or report it as income on your tax return.
Be grateful, it's a good thing.
Cuilean
 
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