Case: Social Security Disability Benefits Includible in Income Despite Private Plan Offset (T.C. Bench) (IRC §86)

Jan. 13, 2022, 5:00 AM

Social Security disability benefits must be included in gross income under I.R.C. §86, the U.S. Tax Court held in a bench opinion posted on the court’s website Jan. 13. The court found that Taxpayer’s Social Security benefits plus her taxable income exceeded the base amount in §86 and, therefore, 85% of her benefits must be included in income. Taxpayer erroneously calculated the taxable portion of her Social Security benefits on her return by looking to the total potential disability award from her employer provided disability plan, before the required Social Security Disability benefit offset, the court concluded. [Murphy v. ...

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