For 2010 I became ill part way into the year. I then went on short term disability and long term disability. I received my LTD From a third party insurer that was part of my employee health benefits. However by the time I received them it was a large amt 25k+ and no taxes state/federal or soc sec were taken out for next years taxes since the payment was in January of this year 2011. How do I pay these taxes and when? Or do I pay a huge amt next year? Also since my tax refund will be large this year due to medical expenses, should i opt to defer my refund until next year?

Thanks!

“However by the time I received them it was a large amt 25k+ and no taxes state/federal or soc sec were taken out for next years taxes since the payment was in January of this year 2011. How do I pay these taxes and when?”----> I guess it depends; disability benefits are not taxable if the insurance premiums were paid entirely by you. If the premiums were paid by your employer, benefit payments will be taxable to the recipient,you, or partially taxable if both employer and employee, you, contributed to the premiums. Insurance premiums paid with pre-tax dollars are considered employer-paid, and benefits are therefore taxable.If your benefits are taxable and you received the benefits in Jan 2011,you need to report it on your 2011 return BY Apr 15 2012.
“Or do I pay a huge amt next year? ---> I don't know how much tax you pay; however, if you are subject to AMT and if it is taxable benfits, then you need to pay tha on the benefits.
“Also since my tax refund will be large this year due to medical expenses, should i opt to defer my refund until next year?”---->No; you can’t. You cannot carry those forward.

Thanks for the response! My big worry on this is that I owe 6k+ in taxes to the Feds and x amount to Ga state. Will I get penalized by the IRS or state with fines or interest if I pay by April 2012?

Thanks again.

“My big worry on this is that I owe 6k+ in taxes to the Feds and x amount to Ga state. Will I get penalized by the IRS or state with fines or interest if I pay by April 2012?---> Of course;however, when you get your bill for the penalty and interest due, you will be able to get into an installment agreement to pay the balance. Needless to say, as we know,it is important to complete your tax return and file it on time to avoid a lot of problems. If you will owe money on your tax return, you may be able to pay the IRS bill with an installment plan. I guess you may contact your local IRS office. Good luck~~
Please visit the IRS website here; Payment Plans, Installment Agreements
IRS Tax Penalties & Interest: Late Filing, Late Payment, and Interest Penalties