Aflac payout

[ILLMAS]

I wanted to post this question to see if anyone here has had experience with a client that received a payout from Aflac. Are the payouts taxable? I know the premium payments are pre-tax, and I am afraid the payouts are taxable. I will do further research but I just want to get an idea for now.

Thanks

MAS

[Medlin Software, Dennis]

Aflac is a company name, not really something one can say is a specific plan type, or what tax reg it falls under.

Consulting the plan docs will be best.

The quick answer is usually based on who paid the premiums, and how. If the employer paid, then it is likely taxable. If the employee paid with after tax money, then it is likely not taxable. If the employee paid with pre-tax dollars, it is likely taxable.

But, consult the plan docs...

[ILLMAS]

10-4 I will have the client bring in the documents.

MAS

[jklcpa]

You didn't say what type of insurance coverage this was, what the payment was for, or how it was reported to your client. Those would all have been helpful for us to know too. Aflac has a variety of policies for accident, life, disability, health, etc.

[ILLMAS]

At this moment I don't know what plan it is, I am just hoping it's not taxable because of the high payout they received. Requesting a copy of the plan anyway.

MAS

[Medlin Software, Dennis]

Absolutely not advice... the only info I can remember about payments from a pre-tax plan was when the amount could be considered reimbursement (such as for medical expenses). But, it not something I deal with often so my memory is not fresh.

[Guest Taxed]

I am not sure if the Aflac policy paid for disability payment, but I currently have a client receiving $1500 in disability payments each month from a disability policy purchased from Liberty Mutual with personal funds. It is not a employer sponsored plan.

The premiums are NOT tax deductible and the month disability received is not taxable.

[mcb39]

What kind of a 1099 is it? I have two different clients who work for Aflac as agents. They are considered self-employed and their 1099 income is fully taxable. They also receive stock in lieu of payments; which is also taxable. One of them has left the company and I will be so glad when the other one does. Aflac has some strange rules in re agents and what is deductible or not.

[Guest Taxed]

I believe MAS's question related to Aflac insurance payment received by a client.

I too have insurance agents as clients and some get a W2 with statutory employee box checked and others get 1099-Misc. I believe it has to do with the contract and licensing agreement they have with the carrier. Supposedly "captive agents" are considered statutory employees and other who get the 1099 are considered "brokers".

[joanmcq]

When I had Aflac with an employer, the payments were post-tax. Check the taxpayers paystubs to be sure.