- Why You Can't Be Without It
- If You Can't Work, Where Will the Money Come From?
- Company Plans Are Only Part of the Solution
- How Much Is Enough?
- Policy Options
- How to Shop for an Individual Policy
- Will Your Disability Benefits Be Taxable?
Both short- and long-term disability benefits are taxable to varying degrees, depending on the type of policy. Here are the rules under current law:
- Your short-term disability benefits are taxable or tax-free depending upon how the plan premiums are paid. States with statutory short-term disability plans have special rules.
- The portion of LTD benefits you receive that is paid by an employer is taxable to you. Federal, state, and local taxes are withheld; Social Security and unemployment taxes are excluded.
- The portion of LTD benefits you receive that is paid by you is tax-free, except if you pay with pre-tax dollars.
If you are an employee, self-employed, a partner in a partnership, or owner of a corporation and own an individual disability income policy, it's a good idea to check with your tax professional to determine whether your benefits are taxable. Also refer to the chart below to determine if your LTD benefits are taxable.
Individual Disability Policies: Are Your Long-Term Disability Benefits Taxable?
|
Who Pays the Premiums? |
Benefits Are Payable to Whom? |
Who Owns the Policy? |
Are the Premiums Tax Deductible? |
Are the Benefits Tax-Free or Taxable? |
|
Individual |
Individual |
Individual |
No |
Tax-Free |
|
Individual |
Individual |
Individual |
Yes |
Taxable |
|
Employer |
Individual |
Individual |
No |
Taxable |
|
Self-employed (sole proprietor) |
Sole Proprietor |
Sole Proprietor |
No |
Tax-Free |
|
Partnership |
Partner |
Partner |
No |
Tax-Free |
|
Partnership |
Partnership |
Partnership |
No |
Tax-Free |
|
Corporation |
Corporation |
Corporation |
No |
Tax-Free |
- ARE NOT A DEPOSIT
- ARE NOT FDIC-INSURED
- ARE NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY
- ARE NOT GUARANTEED BY THE BANK
- MAY GO DOWN IN VALUE
Important information about procedures for opening a new account
To help the government fight the funding of Terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.
What this means to you: When you open an account, we will ask you for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver's license or other identifying documents.
Investment products are offered through Osaic Institutions, Inc., Member FINRA/SIPC. Insurance products offered through Osaic Institutions, Inc.
