The taxability of long term disability insurance benefits depends on several factors, including whether the policyholder paid the premiums with pre-tax or after-tax dollars, whether the policyholder is receiving benefits from an employer-provided plan, and whether the benefits are subject to offset under the long term disability policy. Fees paid to an attorney to help you file a long term disability claim, appeal a long term disability claim denial, or to litigate against your long term disability insurer are generally considered tax deductible.
This article provides some general information regarding typical disability benefit scenarios, but The Maddox Firm cannot provide any specific tax or accounting advice. We encourage you to speak with a tax attorney or accountant for specific information regarding the taxability of your long term disability benefits and legal fees.
What are the Tax Implications of Receiving Long Term Disability Insurance Benefits?
The taxability of long term disability benefits turns on how the premiums were paid. If the policyholder paid the premiums with after-tax dollars, the benefits received from the insurance company are generally not taxable. If the policyholder paid the premiums with pre-tax dollars, the benefits received from the insurance company are generally taxable.
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