You must report as income any amount you receive for your disability through an accident or health insurance plan paid for by your employer:
- If both you and your employer have paid the premiums for the plan, only the amount you receive for your disability that's due to your employer's payments is reported as income.
- If you pay the entire cost of a health or accident insurance plan, don't include any amounts you receive for your disability as income on your tax return.
- If you pay the premiums of a health or accident insurance plan through a cafeteria plan, and you didn't include the amount of the premium as taxable income to you, the premiums are considered paid by your employer, and the disability benefits are fully taxable.
- If the amounts are taxable, you can submit a Form W-4S, Request for Federal Income Tax Withholding From Sick Pay, to the insurance company, or make estimated tax payments by filing Form 1040-ES, Estimated Tax for Individuals.
Amounts you receive from your employer while you're sick or injured are part of your salary or wages.