Hello Larry,
I am having difficulty getting straight answers to how taxes work on my LTD and SS disability.
I went on LTD end of December 2018, the insurance required me to apply for SS Disability and pay back to them what I receive. Social Security tax was withheld for 2019 and I got a W2 form. In March I received the first year's SS Disability and the insurance took it from my account. The LTD insurance was company paid by grossing up my income and them paying for it with after tax money I thought this would make my LTD tax free but the company HR says it should not have been paid this way and that the plan calls out for company paid LTD, they are fixing the withholding going forward and are saying that for me it is taxable regardless. I tried to get the W2 adjusted (amended) to take out the amount that had been paid back. I was told it does not work this way. Seems to me I will have to pay taxes on the SS Disability in 2020 so I am paying taxes on this money twice both when I received it in 2019 and again in 2020 on my SS Disability earnings. How do I fix this, this is a lot of tax.
Thanks,

Hi,

My expertise is limited to Social Security benefits, so I can't answer tax questions. What I can tell you is that most private disability insurance policies are designed to supplement Social Security disability (SSDI) benefits, so they require you to apply for SSDI benefits. You'll have to refer to your LTD policy or ask the people administering the plan for the specific rules.

If you do qualify for SSDI benefits, your SSDI benefits could be subject to income taxes depending on the amount of your income. For more information on the taxation of Social Security benefits, refer to the following Social Security website: https://www.ssa.gov/planners/taxes.html.

Best, Jerry