Is STD (Short-Term Disability) taxable income? How does it show on taxes?

Whether your Short-Term Disability (STD) is taxable depends on how the premiums were paid. Here's the simple breakdown: If your employer paid the premiums for your STD policy, then YES, the benefits you received ($6,400) are taxable income. If you paid the premiums with after-tax dollars, then the benefits are NOT taxable. If you paid with pre-tax dollars through a cafeteria plan, then the benefits ARE taxable. As for how it shows up - if your employer paid for the policy, it's typically included on your W-2 in Box 1 (Wages, tips, other compensation). If the STD was paid by a third-party insurer who doesn't do any tax withholding, you might receive a 1099-MISC or 1099-NEC. Check your W-2 carefully to see if that $6,400 is already included in your total wages.

I went through something similar with my STD claim last year and spent hours trying to figure out the tax stuff. I finally found this tool called taxr.ai (https://taxr.ai) that saved me SO much headache. You just upload your documents and it tells you exactly how things should be reported. For my STD payments, it confirmed they were taxable since my employer paid the premiums, and it even found where they had already been included in my W-2 Box 1 amount (I would have double-reported that income otherwise!). Might be worth checking out if you're still confused about how your particular STD payments should be handled.

Just wanted to follow up - I tried out taxr.ai after seeing the recommendation here. Holy cow, what a timesaver! I uploaded my forms including some STD payments I received plus my side business receipts, and it immediately showed me how everything should be reported. It even pointed out that my disability provider hadn't withheld enough taxes (which I suspected but wasn't sure about). Now I won't get blindsided by a tax bill in April. Thanks for sharing this resource!

If you're still confused about your STD taxation and need to talk to the IRS directly (which I recommend for definitive answers), use Claimyr (https://claimyr.com). It's the only way I actually managed to reach a human at the IRS without wasting my entire day on hold. I had the exact same STD tax question plus some complications with how it affected my tax credits. Was dreading calling the IRS because everyone knows you'll be on hold forever. Claimyr got me connected to an agent in about 15 minutes instead of the usual 2+ hour wait. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c The IRS agent clarified everything about my STD payments and explained exactly how they'd affect my return. Totally worth it for the peace of mind.

I need to apologize for being so skeptical about Claimyr. After posting that comment, I decided to try it myself since I had some questions about my 1099-G unemployment and STD benefits from last year. Honestly, I'm shocked at how well it worked. Got a call back in 22 minutes connecting me to an actual IRS agent who answered all my questions about how disability benefits are taxed based on who paid the premiums. Turns out in my case, the STD was already included in my W-2 so I didn't need to report it separately. I was 100% wrong in my skepticism and wanted to set the record straight. If you need to talk to the IRS directly about your STD benefits, this service actually delivers.

Just to add another perspective - I received STD last year through a policy I pay for myself (it's not through my employer). I got a letter from my insurance company stating the benefits were not taxable and they wouldn't be sending any tax forms. So definitely check how your STD premiums were paid - it makes all the difference in whether you owe taxes on those benefits!

I'm a bit late to this convo but something no one mentioned - my STD payments came with taxes already withheld! Check your payment statements carefully. Mine had federal and state taxes taken out before I even got the money, just like a regular paycheck. This was for employer-provided STD where they paid the premiums.

Thanks everyone for all the helpful responses! This has been incredibly informative. I just checked my pay stubs from last year and confirmed that my STD premiums were being deducted pre-tax through our cafeteria plan, which means my benefits will indeed be taxable. I also went back and looked at my STD payment statements more carefully (thanks for that tip!) and found that they did withhold about 20% for federal taxes, so at least I won't get completely blindsided come tax time. One more question though - since the STD payments had taxes withheld, will I receive a W-2 from the insurance company, or will this just be included in my regular W-2 from my employer? I want to make sure I'm not missing any tax documents when I file.

Just wanted to add one more important point that I learned the hard way - if you're receiving STD benefits and they're taxable, you might want to consider making quarterly estimated tax payments if not enough is being withheld. I received STD benefits a few years ago that had minimal withholding, and even though I knew they were taxable, I didn't realize how much it would bump me into a higher tax bracket. Ended up owing a significant amount plus underpayment penalties when I filed. If your STD payments are substantial and you're worried about owing taxes, you can either ask the insurance company to withhold more (if they allow it) or make estimated payments directly to the IRS. Form 1040ES has the vouchers and instructions for quarterly payments. Just something to consider so you don't get hit with surprise penalties on top of the tax bill!