Tax Planning for Retirees

Disability Benefits

  • § 13.01 Overview of Taxation of Disability Benefits
  • —–[1] Nontaxable Disability Payments
  • —–[2] Taxable Disability Payments
  • —–[3] Plans Offering a Tax/Nontax Option
  • —–[4] Transition from Disability Payments to Retirement Payments
  • —–[5] Structured Settlement of a Disability Lawsuit or Workers’ Compensation Claim
  • —–[6] Income Tax Withholding
  • § 13.02 Disability Benefits Taxable or Nontaxable Due to Source of Contributions
  • —–[1] Definition of Sourced Disability Benefits
  • —–[2] Disability Benefits Entirely Nontaxable Due to Employee Contributions
  • —–[3] Disability Benefits Entirely Taxable Due to Employer Contributions
  • —–[4] Partially Taxable Disability Benefits Due to Partial Employer Funding
  • ———-[a] Partial Employee Funding in General
  • ———-[b] Individual Disability Insurance Policies
  • ———-[c] Group Disability Insurance Policies
  • ———-[d] Multi-Year Disability Covered by Group Insurance
  • ———-[e] Uninsured Disability Plans
  • ———-[f] More than One Class of Employees Covered by a Plan
  • ———-[g] Plan Providing Both Disability Benefits and Other Types of Benefits
  • —————[i] Contributions Made to Qualified Retirement Plans
  • —————[ii] Contributions Made to Other Types of Multi-Benefit Plans
  • —–[5] Corrections of Employer Errors or Methodology
  • —–[6] Plans Offering Employees an After-Tax Contribution Option
  • —–[7] Disability Benefits Paid to Former Employees
  • —–[8] Potential Conversion of Disability Benefits to Retirement Benefits
  • —–[9] Disability Payments to Self-Employed Individuals
  • —–[10] Payroll Taxes and Withholding from Disability Payments
  • ———-[a] Disability Payments from a Qualified Plan or Eligible State/ Local Government Plan
  • ———-[b] Disability Payments Under Other Types of Plans
  • ———-[c] Social Security (or FICA) Tax Withholding on Disability Payments
  • § 13.03 Disability Benefits Nontaxable Regardless of the Source of Funding
  • —–[1] Categories of Nontaxable Disability Payments
  • —–[2] Workers’ Compensation Benefits
  • ———-[a] Common Types of Excludable Workers’ Compensation Benefits
  • ———-[b] In the Nature of Workers’ Compensation
  • —————[i] Qualifying as a Statute in the Nature of Workers’ Compensation
  • —————[ii] Meaning of Certain Workers’ Compensation Terms
  • —————[iii] Disability in the Course of Employment
  • —————[iv] Effect of Presumptions
  • —————[v] Effect of Poor Administration
  • —————[vi] Payments Made Under the Qualifying Statute?
  • ———-[c] Age, Length of Service, or Employee Contributions
  • ———-[d] Choice of Disability or Retirement Provisions
  • ———-[e] Retroactive Reclassifications of Benefits
  • ———-[f] Conversion to Retirement Benefits
  • ———-[g] Tax Treatment of Nonqualifying Benefits
  • ———-[h] Workers’ Compensation Paid to Divorced Spouse of Employee
  • —–[3] Payments for Loss of Limbs, Disfigurement, Etc.
  • —–[4] Payments for Injuries Due to Actions of Terrorists or the Military
  • —–[5] Disability Payments to Military Personnel and Others
  • ———-[a] Only Certain Disability Payments Excludable from Gross Income
  • ———-[b] Retroactive Corrections and Tax Refunds for Military Disability
  • ———-[c] Entitlement to Disability Payments from the Department of Veterans Affairs
  • —–[6] Disability Benefits Paid for Wrongful Acts (Torts)
  • § 13.04 Structured Settlement of a Lawsuit or Workers’ Compensation
  • § 13.05 Potential Conflicts Between Disability and Social Security Provisions
  • § 13.06 Treatment of Interest, Medical Expenses, and Attorney’s Fees
  • § 13.07 Tax on Net Investment Income Generally Not Applicable
  • § 13.08 Power of Attorney Effective Upon Disability

» Chapter 14 – U.S. MILITARY RETIREMENT AND DISABILITY BENEFITS