How Do You File Taxes On A Long-Term Disability Lump Sum?
Calculating the taxable amount of your disability benefits can be a daunting task. If your lump sum claim is from a private or corporate source, one set of rules applies. If your lump sum is from Social Security disability income, then different calculations are used. Calculating taxability of corporate or private disability benefits is easy. If you paid for the insurance premiums out of your own pocket and did not deduct them in any way, then all proceeds, lump sum or otherwise, are tax-free. If your employer paid the premiums or you deducted them on your tax return, then they are taxable as ordinary income. If you received a lump-sum SSDI benefit, remember that this amount is retroactive to previous years. But whatever you do, don’t count the entire amount as income in the year it is received. If you do, you will pay taxes on this income that you don’t need to pay. Look carefully at your Form SSA-1099. It will show the entire amount of SSDI paid for the year in box 3, but it should a
