Mu social secuirty disability is 2050 a month. I bought (through my former employer) long term diability insurance with after tax dollars (no employer contribution). The total between the two is approx 5400/mo. Is this income taxable and if so to what extent?

AtlantaTaxExpert

Since you paid for the Prudential disability insurance out-of-pocket, that income is not taxable.

Social Security Disability is NEVER taxable.

christj1

I posted this message here and continued to look for my answer. I came across a website called "Free Advice". It said that Social Security disability benefits may be taxed. If you file a federal income tax return as an individual with a combined income between $25000 and $34000 then 50% of the Social Security disability payments are subject to income tax. If your combined income exceeds $34000 then 85% of your Social Security disability benefits are taxable. It went on to say if you had third party disability benefit that you paid for (not your employer) with after tax dollars then that is not taxable. Your answer is defintiely different. WHich is true?

KeepItSimpleStupid

Social Security Benefits may be taxable. Look at Internal Revenue Service for rules.

AtlantaTaxExpert

Your Prudential disability income is totally tax-free and does not enter into the equation.

That being the case, you need only consider the Social Security disability, which, at $24,600, is below the tax threshold.

Hence, I stand by my original posting IF the Social Security disability and the non-taxable Prudential disability are your ONLY sources of income.

KeepItSimpleStupid

IRS info

Are Your Social Security Benefits Taxable?

AtlantaTaxExpert

Glad to help!

dandydon

How do you know that the Prudential payments are non-taxable? Will there be a line item on the paycheck stub? All I see is a CA SUI/SDI which i different then Prudential. I assume that this is pre-tax or it would be relected on my paycheck stub.

AtlantaTaxExpert

The rules on taxability of private disability compensation are rather simple:

- If the recipient paid for the disability insurance premiums out-of-pocket, the monthly disability payments are NOT subject to state or federal income taxes.

- If the recipent's disability insurance premiums were paid for by the employer, then they are considered to be deferred compensation and are therefore FULLY taxable.

In the original post, Christj clearly stated: "I bought (through my former employer) long term diability insurance with after tax dollars (no employer contribution)."

Hence, the benefit is NOT TAXABLE!