AFLAC - Do you have to pay taxes on claims received?
My husband was in an accident and has the supplemental AFLAC insurance. We will be filing a claim soon and I'm wondering if anyone has received claim benefits from them?
Do you have to pay taxes on the benefits you receive?
This could end up being allot of money since the doctors are saying he will be out of work possibly 6 to 10 months.
Are my disability benefits taxable?
The Internal Revenue Service (IRS) considers disability benefits under your employer sponsored plan a continuation of your salary; better known as a Third Party Sick Pay plan. Whether your disability benefits are taxable depends on your level of premium contribution. In general, if you pay 100% of the premium for your coverage with post-tax dollars, your disability benefits are tax-free. If your employer pays 100% of the premium, benefits are taxable. If you and your employer each pay a share of the premium, benefits are taxed proportionally based on applicable IRS rulings. Each claim is unique and your taxability will be dependant on the information provided to us by your employer at the time your claim is submitted.
(Reference http://www.irs.gov/pub/irs-pdf/p15a.pdf; pg.13, Section 6: Third Party Sick Pay)
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What type of tax document will I receive in order to report my disability benefits on my income tax return?
Disability benefits will be reported to you on IRS form W-2.
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Will I receive a W-2 even if my benefits were non-taxable?
Yes. Your benefits will be reported in Box 12a and coded with a "J". This means benefits were paid to you but are excluded from your taxable income. Any amount reported in this box does not have to be included on your personal tax return. Any amount in Box 1 is taxable and does have to be reported.
this is essentially an insurance policy you pay into against the ultimate possibility that you will have a reason to need ready cash for immediate needs
like any insurance policy the company is playing the odds that you will never need it and they will never pay out but you are paying into for the security it is there if you do need it
you don't pay taxes on insurance settlement and this is an insurance
AFLAC is paid for by the employee only, and virtually always with tax-paid dollars. As such, the benefits are NOT taxable.
Disability benefits paid for with pre-tax dollars or paid for by the employer ARE taxable, however when the employee pays the premiums with tax paid dollars the benefits are not taxable. AFLAC is pitched to employers as a "zero-cost" benefit that is paid for by the employee. Employers are strongly cautioned to offer it only as an after-tax benefit in order to keep any payouts tax-free to their employees.
Contrary to the claim by one uninformed respondent, Workers Compensation is never taxable either.
Check with your CPA for your particular situation but in general, yes, it counts as income. Even Social Security Disability, coming from the goverment, Workmans Compensation, and Un-Employment benifits are taxed... Makes a lot of sence, right? Check with your tax preparer.
No. Accident insurance income is not taxable.