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August 14, 2019
Question

I pay premiums for disability benefits by payroll deduction. As the benefit pmts are about to begin, this site told me it would be non-taxable.Now the payer is saying no

  • August 14, 2019
  • 3 replies
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    3 replies

    August 14, 2019

    did you make those premium payments on a pre-tax or post-tax basis?  it makes a difference. 

    Also, was the employer contributing some of the premiums? that makes a difference as well 

    jrr226Author
    August 14, 2019

    Although through payroll deduction, it appears that I paid the premiums as if out of pocket (unlike my medical insurance premiums).    I will actually be paid the benefits from the third party (starting next week) through my employer's payroll system, and they are suggesting that it will be treated as if it was wages, vacation pay, etc, W/H, the whole nine yards.  Why should this be added to my YTD stub totals and/or W2?  Doesn't sound right.

    Employee
    August 14, 2019
    **Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
    Carl11_2
    Employee
    August 15, 2019

    To put "the basics" in a nutshell:

    If the premiums you pay are not included in your taxable income, then any policy payout is taxable income.

    If the premiums you pay are included in your taxable income, then any policy payout is not taxable.

    The above statements are not true 100% of the time. That's just how "MOST" policies work. It just depends on the type of policy you have.