Q: Accident policy through work is offering a lump sum settlement instead of monthly payments. I am currently paying taxes
On monthly payments. Will I have to pay taxes on lump sum due to a injury I received and on disability.
A: I'm not quite sure what you mean by your employer's "accident policy." Are you talking about its workers' compensation insurance policy or your employer's short/long-term disability policy? Work comp is tax free whereas short/long-term disability is taxable. I think you are talking about short/long-term disability, in which case, it doesn't matter if it's monthly or lump sum. However, usually, the lump sum payout is less than what you would get if you continued getting monthly payments. It's a way for them to save a little money, and for you to just collect it all at one time and not risk not getting paid out (like in the case of a death or something).
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