Discussion:Long Term Disability
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Discussion Forum Index --> Basic Tax Questions --> Long Term Disability
Discussion Forum Index --> Tax Questions --> Long Term Disability
Ourtuition (talk|edits) said: | 1 November 2009 |
| I have a client who was forced to pay into the employer's LTD plan.The employer forces their employees to pay out of their paycheck for long term disability (which will pay 65% of their salary if the person goes on Long Term Disability) coverage, and employee can choose to supplement cost up to 75% salary plan. The client elected to pay the add's premium to suppllement his salary to the 75&.
It would seem to me that the employee would have to claim 10% of the disability payments as income. Please advise and if anyone knows of the code section/ruling it would be greatly appreciated. thanks ed | |
| 1 November 2009 | |
| It's my understanding that if the employee pays for the coverage with after tax dollars all benefits are tax free. If paid for by the employer benefits are 100% taxable. | |
| 2 November 2009 | |
| The OP gives no info on any employer cost for the LTD insurance. His facts focus on the employee being "forced" to purchase a minimum coverage for up to 65% of wages and then the employee chose to add additional coverage so he got up to 75% of wages. If his payroll deduction was all in after tax dollars and the employer paid none of the cost - his benefits are tax free. | |
Ourtuition (talk|edits) said: | 2 November 2009 |
| employee paid for his coverage, after tax, and the employer paid the premium which enabled the employee to recieve and add'l 10% of disability income.
what is "OP"? thanks Ed | |
| 2 November 2009 | |
| If the employee paid part of the premium with after tax dollars and the employer paid part of the premium (tax free to employee), you need to read the regs mentioned above by R2 which contain a formula to calc the taxable and non taxable portion of benefits. | |
| 2 November 2009 | |
| And your OP only talks of your client (the employee) paying all the cost so forgive my confusion in trying to reply. | |
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