How do you report disability pay on your income taxes?


Quick Answer

Taxpayers report disability income on Form 1040, Form 1040A or Form 1040EZ, according to the Internal Revenue Service. The form used depends on what forms taxpayers need for their taxes. They enter disability income under the Wages and Salaries section of the form.

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Full Answer

If the employer and taxpayer paid for the part of the disability plan, the amount paid by the employer is taxable and must be reported when filing taxes, as the IRS explains. If the disability was paid by the taxpayer only, it is not taxable and does not need to be reported. The payments must also be reported if the premiums are paid through a cafeteria plan because that is considered being paid by the employer.

Not only does disability need to be reported under the Wages and Income section on the appropriate form, but a Form W-4S also needs to be filled out, according to the IRS. This is the Request for Federal Income Tax Withholding From Sick Pay form, and taxpayers should fill it out and send it to their insurance company.

Disability benefits that are available through a long-term care insurance plan don't usually need to be reported to the IRS. However, the IRS recommends that taxpayers should talk to an accountant or qualified tax professional to find out if their long-term care insurance plan qualifies for a tax break.

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