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Disability insurance - how to calculate what's taxable (check my math/understanding)

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  • Disability insurance - how to calculate what's taxable (check my math/understanding)

    Working through the WCI newletters and getting my disability insurance set up but trying to calculate exactly what amount of income I should target as I add an individual policy.

    I have a 10k/month group policy through my employer of which 85% of the premium is paid by the employer. I get that means it will be taxed as income

    So does that mean I take $8500 x12 = 102,000 and pay at the 22% marginal tax rate for MFJ status? Do I have to pay FICA taxes on that as well (assuming not)? I'm assuming no payroll tax. And do deductions (standard or itemized) work the same way? I assume they would...

    If all that's correct, using the standard deduction, it would look like this: 102000 - 24800= 77200 as taxable income. Based on the brackets, that equates to ~9k of federal taxes without any credits applied. So (77200-9000)/12=5683. And then with the additional 15% of my benefit being untaxed, would equal 5683+1500=7183/month.

    I realize I would also need to add in State income taxes, but this is a start...

    Where did I screw this up?
    TIA
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