How to Enter Short-Term Disability Income on a 1040

According to the IRS, short-term disability income received under your employer's plan is considered part of your salary. Therefore, your employer is obligated to report this income and issue you a W-2 reflecting these payments. Whether your short-term disability payments will be considered taxable or not will depend on how your disability insurance premiums are paid. If your employer pays the premium in full, your benefits are taxable, and if you pay the premium in full, your benefits are not taxable. If both you and your employer share paying the premium, your taxable benefits will be proportionately calculated.

Step 1

Review the W-2 sent to you by your employer to determine if you need to report your short-term disability income. Any wages reported in box 1 are taxable and must be reported to the IRS. Any wages reported in box 12a, along with a "J" code, are not taxable and do not have to be reported to the IRS. If you don't have any figure reported in box 1, you won't need to file your short-term disability income.

Step 2

Obtain Form 1040 from the IRS website (see Resources). Fill out the first three sections as usual. These sections include your personal information, filing status and exemptions.

Step 3

Enter your short-term disability wages on line 7 under the income section of Form 1040. Your total short-term disability wages will be listed in box 1 on your W-2.

Step 4

Enter any additional income you need to report on lines 8 through 21. Add lines 7 through 21 and enter that figure on line 22. This figure represents your total reportable income.

Step 5

Complete the remaining sections of Form 1040 as usual. These sections include adjusted gross income, tax and credits, other taxes, payments, refund, amount you owe and your signature.

references & resources