How to report disability insurance income?

She should have already received a W2 from the third party IF those premiums were "pre tax". And it sounds like it, since FICA was withheld. this is what I've seen from Unum, a big insurance company up in Maine.

ChEAr$, Harlan Lunsford, EA n LA

That w2 from the Ins co should NOT be FICA or medicare wages

___________________________________

-----> real address on hobokeni or hobokenx

Thanks so much for your prompt reply.

Yes, that is what I learned from

Thanks again.

I agree; BUT.... it often is. However, just FICA and not the 1.45% for medicare. Go figure. (They don't)

ChEAr$, Harlan

The OP mentioned that the premium was withheld from her paycheck.

This may indicate that this was employee-paid disability.

If that was the case, then UNUM should not have been withholding anything, and she should not be receiving a W2.

UNUM has made mistakes in this area in the past (personal experience).

--ron

Au contraire, mon frere! It doesn't indicate anything except two possibilities; either it was pre tax or post tax. And we don't know.

On the last point, ron, I will certainly agree with you!

ChEAr$, Harlan Lunsford, EA n LA

Oh, I certainly agree that we don't know. That's why I wrote "may" indicate.

By the way, I don't know what the usual procedure is. But in my case, the W2, had it been issued, would have come from my employer, and not from UNUM.

--ron

That was my expectation, too. And in fact, my sister "discovered" later that she did indeed receive two(!) W-2s from the employer, the second presumably covering the disability insurance payments. Even that seems odd to me, at least if the EIN is the same on both W-2s. But I have not seen the W-2s myself; and I would not rely on my sister's interpretation of the facts.

One important fact that I don't think has been addressed. You mentioned that "Premiums were paid by a deduction from her paychecks."

This raises the question (at least in my mind) as to whether this was an employee-paid disability policy using AFTER-tax dollars. If it was, then she probably should NOT be receiving any W2 at all -- the payments would be non-reportable. And she certainly should not have had any FICA withheld.

However, if the amount deducted on her paycheck to pay for the policy was NOT part of her taxable income (i.e. part of a cafeteria plan), then the disability income would be fully taxable to her.

This link