Tax questions

April 11, 2000

Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions in advance of the April 17 filing deadline.

I have been on full disability for the year. The only benefit I receive is from a disability insurance policy that was provided as a benefit by my employer, at no cost to me. I have applied for Social Security but have not been approved. Is the disability benefit taxable? If so, at the full rate?

Compensation received under a policy of accident and health insurance paid by an employer for permanent injury or loss of bodily function is fully includable in gross income and taxable to the employee. If the employee contributed to the premium with after-tax dollars, then a portion of the benefits would be nontaxable.

Susan J. Huddy, CPA, Costello & Huddy, Chartered

The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.

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