When an employee pays all of the premiums for disability insurance coverage, the payments are not deductible and the benefits received are tax free.

Question

Quizplus · Accepted Answer

When an employee pays for disability insurance coverage with after-tax dollars, the benefits received are tax-free. Since the employee paid for the premiums with after-tax dollars, they are not deductible on the employee's tax return.

When an Employee Pays All of the Premiums for Disability