Taxable LTD Disability Payments Included in Box 1 of W-2: Safe Harbor income qualifying for IRA contribution?
Alan-iracritic@
This question was posed several years ago, and Alan-iracritic@ answered it in the affirmative, i.e., YES……taxable LTD disability payments are considered “safe harbor” payments, which qualify for IRA contributions. Can anyone cite any Internal Revenue Code section language that supports this?
Permalink Submitted by Alan - IRA critic on Fri, 2021-01-08 18:03
The following is copied from IRS Pub 590A, p 6. It should suffice unless you are digging deeper and have a situation where the LTD payments were NOT properly reported on a W-2, and the taxpayer thinks they should have been.
“Wages, salaries, etc. Wages, salaries, tips, professional fees, bonuses, and other amounts you receive for providing personal services are compensation. The IRS treats as compensation any amount properly shown in box 1 (Wages, tips, other compensation) of Form W-2, Wage and Tax Statement, provided that amount is reduced by any amount properly shown in box 11 (Nonqualified plans). Scholarship and fellowship payments are compensation for IRA purposes only if shown in box 1 of Form W-2.”
Permalink Submitted by Richard Hogan on Fri, 2021-01-08 18:08
Thank you. Yes, the Insurance Company reported it appropriately on my W-2 in Box 1.