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    marthatyner's Avatar
    marthatyner Posts: 1, Reputation: 1
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    #1

    May 14, 2011, 07:43 AM
    Must I pay taxes on the disability backpay payment? If so, how much do I pay?
    I was approved for disability and was sent a large backpay disability check. Must I pay taxes on this check amount and if so how much?
    Indian CPA's Avatar
    Indian CPA Posts: 22, Reputation: 7
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    #2

    May 14, 2011, 11:49 AM
    There isn't a simple Yes or No answer.
    If the disability payments are from a private policy that you made premium contributions to (not part of a State program or entirely funded by employer plan), than the payments are NOT taxable income.

    Refer to IRS Publication 525.

    Indian CPA
    Home - Indian CPA
    joypulv's Avatar
    joypulv Posts: 21,591, Reputation: 2941
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    #3

    May 14, 2011, 12:09 PM
    If this is US Social Security Disability, you must include that lump sum in your calculations. Whether you will owe or not depends on factors such as total income, single/married, and whether you take the lump sum election for benefits covering the previous year, which may or may not mean a lower tax. If you feel anonymous you can say all that here, but I wouldn't if this ID is your real name.
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