Is Keyontae coming back? Curious tweet...

Insurance payouts for medical, car, life insurance are typically not taxable, but I'm pretty sure short and long term disability are treated as income and therefore taxable. Seems like this kind of coverage is most akin to LTD so I'm guessing it is taxable

 

This is true.

 

Off the top of my head, it depends whether the premiums were paid by your employer. If the employer paid the premiums, or if you paid them through a pretax employer deduction from your wages, the benefits are taxable. If you paid the premiums out of your own after tax dollars, the insurance payout should not be taxable.

 

I am confused. Insurance covers a loss. There shouldn't be a taxable gain. It at best is break even.

My wife was injured in a car/bicycle accident and her insurance compensation was non-taxable.

 

Where you got lost was trying to make sense out of the tax code. LOL!

 

I guess that the issue is if the insurance covers income you would have made versus other kinds of loses.

 

Not really. Disability insurance payments to cover your lost wages is taxable if you paid the premiums pretax through an employer plan and non-taxable if you paid premiums with your own post- tax money.