What is taxed and what isn’t can be confusing. In the case
of disability pay, whether it is taxed or not usually depends on who paid for
the disability insurance coverage. Perhaps your employer paid and you were
covered as a fringe benefit. In that case, when you are disabled and the
coverage kicks in, the benefits you receive are taxable. However, what if you
paid for your disability insurance yourself, with after-tax dollars? In that
case, the payments you later receive on disability are tax-free.
Questions: http://rehcpas.com/
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