Tax
Jul. 25, 2017
Disability pay can be tax free, but in many cases it is not
This dividing line may sound simple, and it can be. Yet there are many tax disputes over these kinds of issues. Then, when you combine several tax rules, the complexity gets worse.
Robert W. Wood
Managing Partner
Wood LLP
333 Sacramento St
San Francisco , California 94111-3601
Phone: (415) 834-0113
Fax: (415) 789-4540
Email: wood@WoodLLP.com
Univ of Chicago Law School
Wood is a tax lawyer at Wood LLP, and often advises lawyers and litigants about tax issues.
What is taxed and what isn’t can be confusing. In the case of disability pay, whether it is taxed or not usually depends on who paid for the disability insurance coverage. Perhaps your employer paid for your disability coverage, and you were covered as a fringe benefit. In that case, when you are disabled and the coverage kicks in, the benefits you receive are taxable.
However, what if you paid for your disability insurance yourself...
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