Legal Question in Tax Law in Florida

Re: Long Term Disablity Insurance-Should I settle?

You will have to speak to an attorney about whether you should settle your claim and whether it will impact your social security benefits. Perhaps you could pose those questions to the non-tax attorneys on this BBS (is there a section to submit questions to Social Security attorneys?).

As for the tax question, you very well may be able to structure the settlement so that it is not taxable; however, this will depend on the facts surrounding the settlement. You should discuss this with your attorney as well as the tax laws for disability payments recently changed.

You might look at this generic description of the tax treatment of settlement agreements: http://www.irstaxtrouble.com/2005/08/tax-treatment-of-settlement-agreements.html.

Nothing in this post is intended to be legal or tax advise, so it is imperative that you speak to an attorney.

Hope that helps. Good luck.