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Megan C
Megan C, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 16576
Experience:  Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level
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My wife receives long term disability from her works insurance

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My wife receives long term disability from her work's insurance company. They have offered us one time buy out of $60,000, which we are currently contemplating. My question is what would it do to our taxes (it would almost double our income)? Would we have to file and pay taxes on the buyout immediately or since it is already July and we would probably receive the payment in August or September

MyVirtualCPA :

Thanks for asking your question! I'm sorry to hear about your tax issue and I'm going to try my best to help you understand or resolve it.

MyVirtualCPA :

Who pays the premium on the long term disability plan - is it your wife, or your wife's employer?

Customer:

My wife's employer

MyVirtualCPA :

Okay, then the entire amount becomes taxable. You will not have to file your taxes right away, although the insurance company should withhold a portion of the payout

MyVirtualCPA :

You will file your tax return in April as typically expected

Customer:

Thank you!

MyVirtualCPA :

You're welcome

MyVirtualCPA :

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