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Author: libc Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121316  
Subject: Re: To Criser: Disability Taxation Date: 1/9/2001 9:09 AM
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In addition both for payments received from either GLTD or Individual Policies the first six months of paid benefits are also subject to FICA and the Medicare Tax.

Criser, I would like to know the specific IRS Section or Regs that mandates the FICA and Medicare Tax withholding...do you know?<?i>

Not Chris here, but I think I can help. FICA wages are defined in IRC 3121, and the specific situation you describe is covered in 26 CFR 31.3121(a)(4)-1.

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Phil Marti

Phil: Here is another answer that I received:

f the disability income payments are required to be included in the income of the employee, the payments are generally considered to be wages and are, thus, subject to income tax withholding and the taxes under the Federal Insurance Contributions Act (FICA) and the Federal Unemployment Tax Act (FUTA) (see Reg. Sec. 1.104-1(d) for support of taxability of disability income; see Code Sec. 3121(a) for definition of "wages"). However, disability payments are exempt from FICA and FUTA tax after the end of six calendar months following the last month in which the employee last worked for the employer (per Code Sec. 3121(a)(4) and Code Sec. 3306(b)(4), which exclude such payments from the definition of "wages" for purposes of FICA and FUTA).

LIBC
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