The Key West Citizen

About Your
'57 Income
Tax Return
Disability Benefits
Laurie B. Tomlinson, Director
of the Internal Revenue Service
for this district, today explained
the Federal income tax rules
which apply to amounts received
as compensation for sickness or
disability.
Any of the following payments
which are received on account of
illness or personal injury should
not be reported on your Federal
income tax return:
Damages in settlement
of a
claim.
Payments under
Workmen's
Compensation Acts.
Payments under an accident or
health policy on which you pay
the premiums.
Payments on account of your
contribution to an accident or
health plan jointly financed by
you and your employer.
Payments under an employer-financed plan for sickness or injury to you or your dependents
if received as reimbursement for
medical care or as compensation
for the permanent loss or loss of
the use of a member or function
of the body or for permanent
disfigurement.
Pensions or annuities to an individual for injury or sickness resulting from active service in the
armed forces of any country or in
the Coast and Geodetic Survey or
the Public Health Service; or payments to the beneficiaries by reason of the death of such individual.
The law also allows you to exclude from income amounts received as wages or in place of
wages under a wage continuation
plan financed by your employer
when you are absent from work
due to injury or sickness. The
amount to be excluded is limited
to a weekly rate of $100.
In cases where you are paid
more than $100 per week, the
amount to be excluded is computed by multiplying the amount
received by $100 and dividing the
result by your weekly rate of payment. For example, assume your
pay is $150 for a five-day week.
You are absent from work for
three days due to an injury and
are paid your regular pay of $90.
Of the $90 received, you would
exclude $60. (90 multiplied by
100 equals $9,000, and $9,000 divided by $150 equals $60).
Keep in mind, however, that
you cannot exclude wages received for the first seven days of
absence from work due to illness,
unless you were hospitalized at
least one day during your illness.
If you are absent from work due
to an injury, the exclusion applies from the first day of absence.
If you received pay while you
were absent from work due to
injury or illness and the amounts
received are included on your
Form W-2, enter your gross wages on line 5, page 1 of your Form
1040, and enter the amount to
be excluded on line 6 (b).
You should attach a statement
to your return showing your computation of the amount excluded,
and listing the dates of absence,
the nature of your injury or sickness, and whether or not you were
hospitalized. Form 2440 may be
obtained from your local Internal
Revenue Service for this purpose
if you wish.
Tomlinson advised taxpayers
who have questions concerning
sickness and disability benefit
payments or any other matter on
their Federal income tax return
for 1957 to telephone or visit the
local office of the Internal Revenue Service. The local office
may be reached by telephone at
CY 6-9933. The address of the local office is Room 202, P. O. Bldg.
Key West