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When are my disability benefits taxable?
The benefits are taxable if:
your employer pays the entire premium for your disability insurance
you pay all or part of the cost of your disability insurance premium with pre-tax dollars
you and your employer share the cost of your disability insurance. The amount taxable is based on the percent of your employer’s contribution combined with any portion paid by you with pre-tax dollars.
Who can I contact with questions about my W-2 form?
Call the Unum Tax Reporting Group at 1-
800-845-2290. Our hours of operation are 8:00 AM-8:00 PM EST from January 12 thru February 12 and 8:00 AM-6:00 PM EST from February 13 thru March 31. Any of our experienced representatives will be able to assist you.
Why is Unum shown as my employer when I never worked for Unum?
The IRS requires that Unum show its name as the employer when Unum issues the W-2 form. This lets the IRS know who prepared the form and is for reporting purposes only.
My tax accountant says these benefits are not taxable because I am permanently and totally disabled. Why does Unum show them as fully or partially taxable?
The benefits paid to you by Unum are considered third-party sick pay. When the employer pays the premium or the employee pays for the premium with pre-tax dollars for the disability insurance, the benefits paid as third party sick pay are taxable. Please refer to IRS Publication 15-A for more information regarding the taxation of third party sick pay.
If I am permanently and totally disabled, why does Unum call it sick pay?
The nature and severity of your disability do not determine taxability. The IRS states that if any benefits under the plan can be paid for a temporary period of time, then all benefits under the plan are temporary benefits. This is what qualifies Unum's benefits as sick pay.
If I receive Social Security Disability income or Worker’s Compensation and make a repayment to Unum, does this affect my taxable income and the reporting on my W-2 form?
Yes, any portion of the repayment that applies to the benefits paid in the current year will be reduced from your current year W-2 form. Unum will notify you how much, if any, of the repayment is applicable to a prior year. You may be able to take this prior year repayment amount as a deduction or credit on your current year tax return. Please contact your tax preparer regarding these rules and refer him/her to IRS Publication 525.
Why does Unum issue a W-2 form and show the benefits paid as wages? Will this cause me problems with Social Security?
The IRS requires that third party sick pay be reported on Form W-2. Box 13 of the W-2 form indicates this is third party sick pay, so when this box is checked, Social Security understands that you are only receiving disability benefits.
How do I change the tax withholding amounts from my disability benefit payments?
Contact the Unum Disability Benefit Specialist who handles your disability claim for any changes you want to make to your federal and/or state tax withholdings. If you do not know how to contact your specialist directly, call 1-
800-858-6843 from 8:00 AM-8:00 PM Eastern Standard Time and one of our representatives will help you reach the right person.