I have a question about disability insurance taxes. Do I have to report taxes on disability insurance payments I received?

Regarding taxes on disability insurance, you can exclude disability insurance taxes on some disability insurance benefits when you report your income. One of these must apply for you to exclude the payments:

• You bought the policy with after-tax dollars.
• You had your employer pay the policy on an after-tax basis the year you became disabled. You must have made that election prior to the beginning of the plan year.

If your employer paid your benefits with pre-tax dollars, you must include those payments as income.

If you have taxable disability income, you might qualify for the elderly or disabled credit. To qualify, both of these apply:

• You’re at least age 65.
• You’re totally and permanently disabled.