Question

Disability payments received after retirement that were paid for by the?

Taxpayers employer are not taxable

Taxpayer employer are taxable

Taxpayer with pre tax dollars are not taxable

Taxpayer with after tax dollars are taxable

Answer 1

To receive disability payments after retirement we have to contribute to disability insurance scheme.

The premium to such scheme can be paid by the employer or the employee himself.

If the employer had paid premium on behalf of employee then the payments received are taxable in the hands of employee.

If the employee himself paid premium with after tax dollars then in such case the payments are tax free. Had we paid with pre tax dollars then the payments are taxable.

In the light of above provisions the disability payments received after retirement that were paid for taxpayers by the employer are taxable.

So the answer is Option B.