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March 8, 2022
Question

Short term disability

  • March 8, 2022
  • 1 reply
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I have received short term disability payments through my union and they have said they do not give a T4 or any other form because no tax was taken off.My question is where would I put the income on my tax return? Or do I not have to claim the income? Thanks.

    1 reply

    April 4, 2022

    It depends.

    "Generally, if you pay the entire amount of the disability premium yourself, your disability benefits will be tax-free. This may bring your income while on disability closer to your current take-home pay.

    If your employer pays all or part of the disability premium, your disability benefits will be subject to income taxes."

    Information, as per Canada Revenue Agency (CRA):
    Disability insurance - Canada.ca

     

    • If your employer pays all or part of the disability premium, it is taxable.
    • If you paid for the coverage off of each paycheck with pre-tax dollars, then it would be taxable
    • If you paid for the insurance with post-tax dollars, then this would be non-taxable.
    • If a portion was paid with post-tax dollars and with pre-tax dollars and/or paid by your employer, then the percentage that was not paid with your post-tax dollars, would be taxable. (Your post-tax dollar portion would remain tax-free).

    If your coverage is tax-free, then you are not required to include it on your tax return.

    Thank you for choosing TurboTax.