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Are Income Insurance Claim Payments Taxable?
When calculating how much Income Insurance you need, it's easy to overlook the fact that tax is payable on the Claim Payment received.
How Much Tax is Payble?
That depends on your taxable income.
Income Insurance Claim Payments are effectively treated as taxable income, which is added to any other taxable income you receive, such as rental property income, etc.
Will It Be Enough?
That depends on your expenditure. Consider this comparison of Employment Wages and Income Insurance Claim Payment:
| Employment Wages | $70,000 |
| - Tax on Employment Wages | - $15,347 |
| = Employment After-Tax Wages | = $54,653 |
| Maximum Insurable Income (75% of Employment Wages) | $52,500 |
| - Tax on Claim Payment (Maximum Insurable Income) | - $9,185 |
| = After-Tax Claim Payment | = $43,316 |
| Net Difference Between Employment Wages & Claim Payment | $11,337 |
Your expenses may be lower whilst on claim, but to be certain you should complete an Expenditure Analysis when completing your Income Insurance assessment.
If you need any help determing how much Income Insurance you need, and what you can expect to be paid, please Contact Us for a Free Financial Assessment.
| Tags:TaxInsurance |
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