Washington (June 21, 2004) -- Employers that provide disability benefits coverage for employees can leave the taxability of the benefits up to the employee, according to a recent ruling by the Internal Revenue Service.
The ruling is important for businesses that have traditionally paid long-term disability insurance premiums for their employees, notes CPA Michael I. Stein, tax partner at Legacy Professionals LLP, in Chicago. "The ruling allows these employers to amend their existing plan to permit employees to irrevocably elect to have the long-term disability premiums included as taxable income on their W-2. If an employee makes this election, long-term disability benefits received under the plan will not be included in the employee's income for tax purposes," said Stein.
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