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Question

I am disabled and have been receiving disability income from both SSDI and a private insurance carrier since 1998. In 2009 my private carrier discovered they had underpaid my benefit by about $8000 per year since 2002 (1/2 of which is taxable). I received a lump sum retroactive payment in 2009 of $56,000. Can I file amended returns for the prior years to minimize the tax impact of such a large payment in 2009? Thank you.

Submitted: 19 days and 14 hours ago.
Category: Tax
Value: $15
Status: CLOSED
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State/Country relating to question: Massachusetts

Accepted Answer

Unfortunately - your income is taxable in the year it is received and should be reported on your 2009 tax return.

You may not report disability income received in 2009 on previous year tax returns.

 

As a side effect - 85% of your SS disability benefits will be taxable.

Because your additional tax liability is based on your private insurance carrier mistake - I might suggest to contact them and ask to compensate your additional tax liability.

 

Let me know if you need any help.

 

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Expert: LEV
Pos. Feedback: 99.3 %
Accepts: 
Answered: 11/2/2009

Tax Preparer

Taxes, Immigration, Labor Relations

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