Are Disability Income Benefit Payments Subject to Income Tax Withholding?

While the tax laws generally require employers to withhold income tax from disability income benefit payments, the tax rules do not require withholding on benefit payment amounts that the employees can excluded from their income. Further, if an insurance company or other entity under an accident or health plan makes the disability benefit payments, the tax rules require no withholding of income tax.

Reproduced with permission.  Copyright The National Underwriter Co. Division of ALM