Comments on: Consider the Impact On Your Finances When Taking a Paid Leave of Absence, FMLA, or Disability From Work

By: erikgraf

erikgraf — Tue, 14 Feb 2012 18:52:08 +0000

If, while my wife was out on leave, she had to pay her medical insurance premiums via check (i.e. not through payroll deductions), and therefore, these out-of-pocket medical premiums paid were not reflected on her W-2 as a reduction to her taxable income, we were debating whether we could “manually adjust” her taxable income for these premiums paid since they were paid to an eligible tax-free cafateria plan? It makes sense to me that the tax treatment should be the same (i.e. tax free) regardless of whether they were paid via payroll or via a written check?

By: Patrick

Patrick — Tue, 12 May 2009 17:38:07 +0000

Very interesting article. I’ve never thought about these things in great depth because I have never needed them. I’m sure many people are in a similar situation.

My wife and I are expecting in July, and while she will become a SAHM, I will need to take some time off. So I’ll be sure to reference this article again when making my decision on how much time I want to take off and how I go about doing it.

By: Kristy @ Master Your Card

Kristy @ Master Your Card — Sun, 10 May 2009 22:58:14 +0000

Interesting article. I’ve never had reason to really look into anything beyond my PTO. I have short-term and long-term disability, just in case, but I have not considered how it would impact my finances beyond the 30 days to file. But, as far as time off goes, I usually take paid time for vacations, though I was looking into the possibility of taking a week unpaid next summer when I go overseas to study abroad, but I just discovered my company won’t allow that. So, now I have to stockpile my PTO because I don’t want to quit and then hope I can come back over a week. That’s just silly in my opinion, and a waste of money for the company as they’d have to send me back through training. I still may fight that if I come up short. We’ll see.

By: Tim Landry

Tim Landry — Thu, 07 May 2009 14:26:36 +0000

Whoops – I am talking Canadian Tax Law

By: Tim Landry

Tim Landry — Thu, 07 May 2009 14:25:24 +0000

I am pretty sure you should re-check your tax rules as they apply to situations where employees and employers share premiums on a DI program. My understanding is that the employees receiving taxable benefits can deduct from those benefits the premiums they have paid and once they have deducted 100% of what they have paid, benefits become fully taxable – i.e. they are NOT taxed proportionate to what the employee paid

By: shana

shana — Thu, 07 May 2009 02:23:07 +0000

Depending on the state that you are in, your short term disability may be exempt from state taxes (CA, NJ, NY, HI) so check your state taxes as well.

It is very, very rare for a disability company to not withhold taxes. Normally they provide you with a W-4 so that you can select the deductions for this time period.

LTD plans sometimes have the option of “tax me now” or “tax me later” and based on the selection, LTD benefits may be tax free if you have paid imputed value of the benefit during the year.

As for insurance premiums, before you go out on leave, you can pre-pay your premiums – generally through payroll – so that you still get the benefit of the pre-tax deduction. Or depending on the company, there can be a catch-up contribution once you return to work. So with a little bit of planning, you can still get the advantages of having pre-tax benefit deductions.

By: Eves Bank

Eves Bank — Wed, 06 May 2009 17:04:11 +0000

I never realized that paid leave would affect your personal finances. It’s nice to have this pointed out. Although I don’t think a lot of people see this as a major issue.