Understanding Some Government Disability Income Insurance Tax Considerations

Read this tip to make your life smarter, better, faster and wiser. LifeTips is the place to go when you need to know about Government Disability Insurance Options and other Disability Insurance topics.

What Are Some Government Disability Income Insurance Tax Considerations?

Understanding Some Government Disability Income Insurance Tax Considerations

Disability income insurance can have a variety of income tax implications depending on the source of the benefits and other factors. Are you surprised? Always speak with your accountant or tax advisor before making any major decisions or prior to filing your federal income tax returns. Here is some basic information for your consideration.

  • Group disability insurance provided by and paid for by your employer usually results in taxable benefits. If you've purchased the coverage yourself, disability income insurance benefits are often tax free.
  • Social Security Disability Insurance (SSDI) benefits may or may not be tax free. The determination normally depends on what level of other income you may have received during the covered period.
  • Federal disability insurance coverage, like Medicare, Military, or Veterans benefit programs, may or may not result in taxable benefits depending on a variety of considerations of your situation. Read the available information to become knowledgeable about their regulations.
  • Worker's Compensation disability income insurance benefits are often not taxable to you.
  • Federal Employee Retirement System (FERS) benefits are generally taxable as disability pension income.
As you can see, disability income insurance benefits can often be taxable but at other times tax free. Sometimes the taxability depends on who pays the premiums, while at others it depends on the specific language of the program, like SSDI, which provides for tax-free benefits if stated other income levels are not met. Consult your tax advisor to learn the status of your individual situation.

Refer to your insurance policy contract for specific information regarding your coverage and for actual terms, conditions and exclusions. The above statements are general in nature and may or may not reflect the actual terms of your insurance policy.

   

Comments

Nobody has commented on this tip yet. Be the first.



Name:


URL: (optional)


Comment:


Not finding the advice and tips you need on this Disability Insurance Tip Site? Request a Tip Now!


Guru Spotlight
Barbara Gibson