[dpeterson]

My LTD benefits are non taxable and the company requires 100% of the SSDI back pay as repayment. I've received confusing information when asking if the backpayment is taxable, and if having to send it all to LTD makes any difference. LTD has been my only income for 3 years and will be reduced to reflect my SSDI and that of my dep children. That's fine, but how am I supposed to pay a tax bill on over 70K when all of it goes back to the LTD company? If it makes any difference its just me and 2 children, I file Head of Household. Thank you.

[AtlantaTaxExpert]

You will need to claim the payment to the insurance company that manages your Long-Term Disability as an adjustment to the payment. I would have to research to be sure, but, off-hand, I would list the adjustment on Line #21 of Form 1040 as a NEGATIVE number.

If ALL of the back payment must be surrendered to the insurance company, the net effect is ZERO taxable income. When you file the return, attach a copy of the letter/policy that states that any backpay SSDI payments received must be surrendered to the insurance company, so the IRS knows WHY you are reporting the way you are.

STRONGLY recommend you get local professional help filing this return.