disability question

NaeNae55

I have been asked to do some research on possible tax consequences of long -term disability insurance. Please help!

Our LTD plan is fully insured and paid completely by the employee on a post-tax basis. So, no income tax should be deducted from any benefits paid. However, I have also read that this income is taxable for unemployment purposes. Our quote from the carrier for the coming year (we are switching carriers) says that they will not pay this tax. They did say that they will pay the employer part of the FICA taxes, but then they mentioned something about the "first 6 months of disability may be subject to FICA tax withholding". I have never heard about the "6 month" part, and am confused about where this came from and what it means. I have looked in my tax law books (they are probably too old to help) and get nowhere online. Does anyone out there know what this 6 month thing is they are talking about, and can you help me find the law on it?

Thanks for your help!

jpepler

I'm not familiar with the "first 6 months of disability may be subject to FICA tax withholding" clause your prospective carrier is referring to, but I would suggest you ask them to provide you with documentation which explains the rule. Rather than wasting your time and effort trying to research this, just ask them for clarification.