What Does Taxable Income Mean
Question: We got a letter saying we have $12,000.00 credits for taxable benefits paid prior to 2008. What does that mean?
It said we may re-compute our tax for each year that we received disability benefits and declared them as Taxable Income and claim the overpaid tax as a credit on our tax return. It says “Credits for Taxable Benefits Paid Prior to 2008″ then it lists 2007 $7600…2006 $2000.00 and all years prior. I tried entering this information on Turbo-Tax and couldn’t do it.
Answer: You will file amended tax returns for 2006 and 2007. On your returns for 2006 and 2007 have reported disability payments as income while is may not be taxable. So on the amended tax return, you federal tax will be less than what you have on the original returns. Then you will get refund.
Payments you received from a disability insurance policy that you paid the premiums for are not earned income. If this policy is through your employer, the amount may be shown in box 12 of your Form W-2 with code “J.” Then it will be reported as income.
For amending your tax return, you must file IRS Form 1040-X. Column A is what was on the original return, Column C is what should have been there (that is corrected amounts) and Column B is the difference. Complete these columns and then refigure your tax.Read http://taxipay.blogspot.com/2008/04/list-of-articles.html
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