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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 13369
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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Shane, I payed STD with pre-tax dollars Jan-June 1012, became

Resolved Question:

Shane, I payed STD with pre-tax dollars Jan-June 1012, became disabled for Br Ca June 29. I have a 2 week waiting period before benefits are paid. Starting in July I paid STD myself directly to the company. I did receive benefits for that time period of 6 months, when I was paying post-tax dollars. I am required to pay income tax on all that benegit
Submitted: 11 months ago.
Category: Finance
Expert:  Megan C replied 11 months ago.

Megan C :

How are you today? I'm sorry, but Shane is unavailable at the moment, but I would like to assist you if that is possible

Megan C :

Tax on STD benefits depends on if your premiums were paid pre or post tax.

Megan C :

Whether or not you can attribute the payment to pre-tax or post tax depends on the date of the injury onset.

Megan C :

Unfortunately for you, the date of onset is June 29 ... when you were covered based on the pre-tax premiums

Megan C :

Here's a good article on how STD benefits are taxed CLICK HERE

Megan C :

If your injury had happened on July 1, then you would not be taxed on the payments from the plan, because the accident happened while you were covered by premiums paid after tax

Megan C :

and as such your benefit would not be taxable. However, the injury happened while you were covered under a pre-tax plan.

Megan C :

This is the reason that many tax advisors say to pay for your disability benefits after-tax.

Megan C :

Do you have any additional questions about this?

Megan C :

If not, please rate my response as "excellent" so that I may receive credit for assisting you today

Customer: Well I wasn't given the choice of it being pre-tax or post-tax. It is a voluntary benefit, but if your not explained the difference then you don't even know to ask for it to be post-tax dollars.
Customer: This system will not let me rate you and I appreciate your answer.
Megan C, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 13369
Experience: Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
Megan C and other Finance Specialists are ready to help you
Expert:  Megan C replied 11 months ago.
Michele,

I'm sorry that you had difficulty rating - the site has been glitchy here today. Also, I think that your employer should educate you on the difference between pre-tax and post-tax benefits. Because they sell it, saying "oh you will pay less tax" but what they don't tell you is that you will actually pay MORE tax if you have a claim.

I wish you the best of luck, and please let me know if I can be of any further assistance. Thanks again

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