Received LTD benefit, spoke to the ins co and the lawyers neither are reporting this payment to the IRS, do I need to report such inc and if so how?

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sjrcpaAnswer

Level 15

No. Taxpayer must have used after tax dollars for the premiums so collecting the benefit is not taxable.

If anything needs total household income, you should include the amount in that.

The more I know the more I don’t know.

T

taxxman02Author

Level 4

Client produced a pay stub which showed premium's were pd pretax, I know this settlement should be taxable inc. We asked the ins company and they are not reporting the settlement to the IRS or sending out any third party W-2 or 1099 Misc to the client nor are the lawyers the client hired to represent her. The client feels uncomfortable not including the inc , should I include it anyway and just add it as other inc, is there something I am missing as to why they aren't reporting the settlement. Any help welcome.

sjrcpa

Level 15

Is it long-term disabilty benefits? Or is it a settlement for personal injury?

The more I know the more I don’t know.

T

taxxman02Author

Level 4

Long Term Disability Benefit. Client was out on personal injury and after two years the ins co said that she has to accept any job, she hired lawyer and they fought it and won a lump sum judgment.

sjrcpaAnswer

Level 15

No. Taxpayer must have used after tax dollars for the premiums so collecting the benefit is not taxable.

If anything needs total household income, you should include the amount in that.

The more I know the more I don’t know.

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