Diability Benefits - Are they taxable?

Posted by Andy
If you receive payments from a disability insurance policy, odds are that is not taxable to you. Since you didn't deduct the premiums that you have been paying over the years, the benefits are not taxable (similar to life insurance policies).

However, if the policy was provided through your workplace and your employer has been paying (and deducting) those premium payments through the years, then the benefits would be taxable to you. So this would be the exception to the rule.

Note that if you have a policy where some of the policy is paid by your employer and some is paid by you with after-tax money, then you could exclude a portion of the benefits from taxation based on the ratio of who paid the premiums.
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