Instructions

1

Find out who's paying the premiums for your group disability insurance coverage. If you are a W-2 employee, look on your pay stub to see whether premiums are being deducted from your paycheck for long- or short-term disability coverage. If they are, then your premiums are deductible.
2

Check with your employer if you cannot find any premiums deducted on your pay stub. If your company is paying for the premiums out of its own pocket, then you cannot deduct the premiums yourself. If your employer is paying part of the premium and letting you pay the rest, then you can deduct the portion of the premiums that you are paying yourself.
3

Report any disability insurance premiums paid on your Schedule C if you are self-employed. If you paid disability premiums for income related to a partnership, you may be able to deduct them on schedule K-1. If you paid them for rental activities, you can deduct them on Schedule E.
4

Do not deduct any premiums paid for group disability coverage on your 1040 or any supporting schedule. Like your retirement plan contributions, your W-2 will report your disability premiums paid.
5

Do not report any disability benefits paid to you as income if you did not deduct the premiums. Report all disability benefits paid as ordinary income if your employer footed the bill.