Taxation of Disability Benefits

Taxation of Disability Benefits
Who Pays the Insurance Premium? Is the benefit Taxable? How Much of the Benefit is Taxable?
Employer pays 100% Yes 100%
Employer pays portion and employee pays  balance with post-tax dollars Yes Percentage of premium paid by employer
Employer pays portion and employee pays balance with pre-tax dollars Yes 100%
Employee pays 100% with post-tax dollars No None
Employee pays 100% with pre-tax dollars Yes 100%

 

 

Please seek counsel from your CPA or Legal counsel for final guidance. This information
is not intended to be used as such. For additional detailed information about the taxation
of sick pay or disability benefits, refer to the IRS Publication 15-A, Employer’s
Supplemental Tax Guide.