Most of the time, Social Security Disability benefits are not taxable. However, you might have to pay taxes on your benefits if your income is above a certain amount. Some states do not tax disability benefits at all.
Here’s how you can determine if your Social Security Disability (SSD) is taxable.
When Are Social Security Disability Benefits Taxable?
Taxable benefits will depend on your total yearly income. You might have to pay taxes if your income passes the Internal Revenue Service (IRS) threshold:
- $25,000 if you’re single or married, filing separately
- $32,000 if you’re married, filing jointly
Your total income includes half of your disability benefits, tax-exempt interest, and other income sources. If filing with your spouse, you must include their yearly salary. If the total income goes over the above number, you might pay taxes on your benefits.
If you’re in a higher income bracket, 85% of your benefits could be taxable.
Most people on SSD do not have to pay taxes on their benefits. That’s because they already have little or no additional income. To even qualify for SSD, you must have low or no income.
Reporting Your Social Security Disability Income
Social Security can include:
- Disability benefits
- Survivor benefits
- Retirement benefits
You will have to report Social Security benefits when you file your taxes. You’ll find the total in Box 5 of Form SSA-1099. You will need to report the amount on line 5a of Form 1040 or Form 1040-SR. You’ll add the taxable part of your benefits on line 5b of the same form.
Do All States Tax Social Security Disability?
No. Most states do not make SSD benefits taxable. As of 2020, the following states still tax disability benefits:
- New Mexico
- North Dakota
- Rhode Island
- West Virginia
Talk to a local Social Security Disability lawyer about the laws for your state. In some places, the tax rules are close to the IRS’s regulations. A lawyer can determine if any of your benefits are taxable.
What About Back Payments for Disability?
You might get “back payments” for the time you were disabled before getting benefits. If a loved one died, you could also get a one-time death payment. These payments might increase your income for the year.
If a lump-sum payment increases your income, you might have to pay more taxes. However, you may be able to apply some of the benefits to previous years. That could help lower your taxable benefits.
Will You Have to Pay Taxes on Your Benefits?
Probably not — unless you have a higher income. The application process for SSD is rigorous. The Social Security Administration (SSA) won’t approve benefits if you are earning too much.
Those on SSDI apply for it because they need assistance. They are rarely in a higher income bracket. However, if you are worried, talk to a lawyer about your options.
How Can You Get Help Understanding SSD Taxes?
A Social Security Disability lawyer can help you. They can determine whether your benefits are taxable. Your lawyer can also help with your application and answer questions about the process.
At John Foy & Associates, the consultation is 100% FREE. We also do not charge a fee unless you get paid. You can get the help you need now — and at no risk.
How Does Social Security Disability Work?
The SSA provides disability benefits. You will qualify if:
- You have a medical condition that prevents you from working.
- You have paid enough into Social Security taxes.
You must meet the SSA’s definition of a disability. This will depend on if:
- You’re currently working at all.
- You have a “severe” condition.
- Your condition is disabling.
- You can do any work.
Your application will go through a five-step process. If you qualify at each step, you will receive benefits. In 2020, if you make more than $1,260 a month, you won’t be eligible. This is another reason that those on SSDI are rarely taxed.
The SSA must also confirm that you have enough work credits. You earn work credits through taxes on your income. Most adults need 40 work credits to qualify. You must have earned 20 of those credits in the 10 years before your disability.
In 2020, one work credit is worth $1,410 in wages. The exact amount changes from year-to-year. You can earn up to four work credits per year.
Is Supplemental Security Income Taxable?
Supplemental security income (SSI) is another program from the SSA. It is different from Social Security Disability. SSI provides benefits to:
- Disabled individuals with limited income
- Individuals aged 65 and older with limited income (but not disabled)
Some people can receive both SSDI and SSI. No matter what, SSI payments are not taxable.
Talk to a Social Security Disability Lawyer for Free Today
If you have questions about Social Security Disability, contact John Foy & Associates. Our SSD lawyers have over 20 years of experience. We can help you build or appeal your claim.
We know how desperately SSD applicants need benefits. You should get the income you qualify to receive. Contact us today. We’ll discuss your options during a FREE consultation.
To get your FREE consultation, call (404) 400-4000. Or, you can contact us online today. We are available 24/7 to take your call.