Question

I have a question about disability insurance taxes. Do I have to report taxes on disability insurance payments I received?

Answer

Regarding taxes on disability insurance, you can exclude disability insurance taxes on some disability insurance benefits when you report your income. One of these must apply for you to exclude the payments:

  • You bought the policy with after-tax dollars.
  • You had your employer pay the policy on an after-tax basis the year you became disabled. You must have made that election prior to the beginning of the plan year.

If your employer paid your benefits with pre-tax dollars, you must include those payments as income.

If you have taxable disability income, you might qualify for the elderly or disabled credit. To qualify, both of these apply:

  • You’re at least age 65.
  • You’re totally and permanently disabled.

Related Topics

Related Resources

Investment Property Tax

Learn more about investment property tax with advice from the tax experts at H&R Block.

How To Report Self-Employment Income

Can you create a W-2 for self-employed income? Learn more from the tax experts at H&R Block.

Are Your Social Security Benefits Taxable?

Are Social Security benefits considered taxable income? Learn more about Social Security taxability and how it relates to retirement income at H&R Block.

Nontaxable Combat Pay

Learn more about combat pay exclusions and get tax answers at H&R Block.