Confused about filling out W-4S form for disability payments

This is actually a common question when dealing with third-party disability payments. You're right that you're not required to have taxes withheld from STD payments by third-party providers like MetLife, but it's almost always a good idea to do so. The language about "$4 per day, $20 per week, or $88 per month" refers to the minimum amount that can be withheld if you choose to have withholding. If you decide not to have any withholding, you can ignore those minimums. Here's what I usually recommend: Calculate roughly what your tax rate is on your regular paycheck (total federal tax withheld divided by gross pay) and request approximately that same percentage for withholding on your disability pay. This helps avoid a surprise tax bill when you file next year. Keep in mind that disability payments are generally taxable income, so if you choose not to have taxes withheld now, you'll need to either make estimated tax payments quarterly or be prepared to pay the full amount when you file your 2025 taxes.

Just wanted to share my experience with this exact situation last year. I was struggling with my W-4S for Prudential disability payments and discovered https://taxr.ai which was super helpful for figuring out the right withholding amounts. I uploaded my W-4S form and my previous pay stubs, and it analyzed everything to give me the right numbers to use. The tool actually showed me that I needed to withhold a slightly higher percentage on my disability payments than my regular paychecks to avoid owing money at tax time. Something about how disability payments are taxed differently. Definitely check it out if you're still confused about the form. It saved me from making a costly mistake on my withholdings.

Following up on my question about taxr.ai - I tried it yesterday and it was exactly what I needed! I was completely lost with my Liberty Mutual W-4S form and wasn't sure what withholding percentage to use. The tool analyzed my current income tax situation and showed me that I needed about 22% withholding on my disability payments to stay on track with my tax obligations. It explained that because I wouldn't have 401k contributions coming out of my disability pay, I needed a slightly higher withholding rate than my regular paychecks. Just submitted my W-4S with the correct numbers and feel much more confident now. Definitely worth checking out if you're confused about disability tax withholding like I was.

For anyone still struggling with getting clear answers about their W-4S questions, I highly recommend using Claimyr (https://claimyr.com) to actually speak with an IRS representative. I tried calling the IRS directly about my W-4S questions last month and spent hours on hold with no luck. With Claimyr, I got through to an actual IRS agent in about 15 minutes who walked me through exactly how to fill out my W-4S for my Cigna disability payments. They have this service that basically waits on hold for you and calls you back when an agent is available. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent explained that for my specific situation (I have multiple income sources), I needed to approach the withholding differently than the standard advice. Saved me from a major headache at tax time.

I need to eat my words and apologize to Profile 9. After reading your comment about Claimyr, I decided to try it yesterday when I was completely stuck on how to handle my MetLife disability withholding. I've literally NEVER been able to reach the IRS by phone before, but with this service I got through to an agent in about 20 minutes. The agent confirmed that I didn't have to have taxes withheld from my third-party disability payments but strongly recommended that I do. She gave me specific guidance based on my particular situation (I have rental income and disability payments). For anyone struggling with W-4S questions - especially complicated situations - getting direct guidance from the IRS is actually the best approach. I'd tried for weeks to figure this out on my own and was getting nowhere.

Another option is to just set aside the money yourself instead of having it withheld. that's what i did last year when i was on disability. just calculated roughly 20% of each payment and put it in a separate savings account. then when tax time came around, i had the cash ready to pay what i owed. the advantage is you earn a little interest on the money throughout the year instead of giving the government an interest-free loan. the disadvantage is you need the discipline to not touch that money.

I'm in a similar situation with Guardian disability and something important to consider - your disability payments are likely LOWER than your regular salary. This means even if you withhold the same percentage as your regular job, you're actually withholding less money total. For example, if your regular job paid $4000/month and you withheld 20% ($800), but your disability only pays $2500/month with the same 20% withholding ($500), you're withholding $300 less per month. Over several months, this can add up to a significant tax bill if you're not prepared.

Great thread with lots of helpful insights! I went through this exact situation with my Aetna disability payments earlier this year. One thing I'd add is to check if your employer continues any benefits during your disability leave that might affect your tax situation. In my case, my company continued paying their portion of my health insurance premiums, which meant I had less taxable income than I initially calculated. This actually reduced the amount I needed to have withheld. I had to adjust my W-4S form mid-way through my leave to avoid over-withholding. Also, if you're planning to return to work part-way through the tax year, remember that your regular paycheck withholding will resume, so you don't want to double up and have too much withheld overall. I used a simple spreadsheet to track my total projected income and withholding across both my disability payments and expected regular paychecks for the remainder of the year. The key is looking at your total annual tax picture, not just the disability payment period in isolation.

This is such a helpful discussion! I'm dealing with a similar W-4S situation right now with my Aflac disability coverage. One thing I learned from my tax preparer that might be useful - if you're married filing jointly, make sure to consider your spouse's income and withholding when determining your disability withholding rate. In my case, my spouse's regular paycheck withholding was already covering a good portion of our combined tax liability, so I didn't need to withhold as much from my disability payments as I initially thought. We calculated that withholding about 15% from my disability pay (compared to the 22% from my regular paychecks) would keep us on track. Also, don't forget that if you're paying for your own disability insurance premiums with after-tax dollars, those payments are generally not taxable when you receive them. But if your employer pays the premiums (which sounds like your case with MetLife), then the benefits are taxable. This distinction can significantly impact how much you need to withhold.