Reminder for Employers: No Federal Income Tax Withholding on Disability Payments for Injuries Incurred as a Direct Result of a Terrorist Attack Directed Against the United States -- 04-FEB-2014
Disability payments for injuries incurred as a direct result of a terrorist attack
directed against the United States (or its allies) are not included in income.
Because federal income tax withholding is only required when a payment is includable in income,
no federal income tax should be withheld from these payments.