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Are Long Term Disability Benefits Taxable?
If you recently applied for long-term disability benefits plan, you might be wondering if your monthly income is taxable or not. Let us help you to clarify all your doubts.
When a person suffers an accident that prevents them from continuing working and receiving a monthly income, this person can apply for long-term disability benefits. The will receive a monthly income-replacement payments for a period of time, 5, 10, 15 years, or until a certain age (usually 65 years old). To be eligible to receive these benefits, the person must be covered under a disability plan, almost all workers offer disability insurance, however, each employee or self-employee can own their own disability insurance plan they find more convenient.
However, this process does not take effect immediately, it may take months for the insurance company to determine if you are eligible for long-term disability benefits or not. During those months of not being able to work and have a monthly income, you can apply for short-term disability benefits, these benefits are taxable.
The benefits for short and long-term disability income were paid at the time of making the annual tax return, but in 2015 the Canadian Revenue Agency (CRA) made changes in its policies, now benefits for short and long-term benefits have to be taxed at the time the payments are issued, except where the premium for these benefits is fully paid by the employee or when the employee is unable to work as a result of a car accident.
If you’re not aware of who pays for the premium of your benefits for long-term disability, contact your insurance provider, this is key information to determine whether your monthly payment for your long-term disability benefits will be taxable or not. If you are the one fully paying your premium, then the payment of the benefits you are receiving will not be taxable, but if your employer pays for any portion of the premium for your benefits, then your benefits will be taxable.
Long-term disability benefits are regulated differently depending on the providence, when you read your insurance policy be careful you’re reading the policy that apply for your providence, policies can be very similar in each providence but they’re not the same, read carefully and don’t take advice from people who live in a different province.
By law, insurance companies must deliver a denial letter in case your request for disability benefits is rejected. If you receive a denial letter, read it carefully, this is a document full of important information you need to appeal your benefits, appeal each reason with more information and more medical documents. Don’t forget to deliver it before the deadline.
The process of receiving long or short-term disability benefits is very complex when it comes to tax payment, a Personal Injury Lawyer at Lofranco Corriero can guide you through this process. Ensure the economic stability of you and your family. We will help you appeal the benefits of your disability while you worry about your recovery.
If you have been injured in an accident and looking to get benefits for long or short-term disability, call Lofranco Corriero Personal Injury Lawyers at 1-866-563-7262 at for a free, no-obligation consultation. Alternatively, fill in the contact form here and an experienced lawyer will get in touch with you regarding your specific case. If you are unable to travel, we can accommodate you and visit you at a place and time of your convenience.
About Lofranco Corriero: Lofranco Corriero is a Toronto-based law firm that has been representing personal injury victims in Ontario for over 40 years. Since 1980, the team has settled thousands of claims and worth millions of settlement dollars. Their strength as a law firm is that they are trial lawyers - they are not afraid to go to court if need be to win their clients the settlements they deserve.
Lofranco Corriero lawyers can be contacted via 1-866-563-7262 or you can submit a contact form for a free, no-obligation consultation here.