If you are receiving SSDI benefits, you may be wondering how and when your Social Security Disability Insurance (SSDI) benefits can affect your taxes. In other words, will you need to pay income tax on the SSDI benefits you receive? Or, even if you do not need to pay taxes on your SSDI benefits, can those SSDI payments affect the rate at which other assets are taxed, thereby changing the overall amount of tax you must pay? Most people who receive SSDI benefits will not pay income tax on the SSDI payments they receive. However, SSDI payments can affect your taxes, and it is important to understand when and how you need to account for disability benefits when you file your taxes.
SSDI and Taxes: Your Benefits May Be Taxable
Generally speaking, most people who receive SSDI benefits do not need to pay income taxes on those SSDI payments because they do not receive enough money in income annually. However, for some people, SSDI payments will be taxed. In general, SSDI benefits will be taxed if you receive income from another source, or if you are married and your spouse earns enough money to put you over a threshold. While eligibility for SSDI benefits requires evidence that you cannot engage in substantial gainful activity (SGA), you may obtain income from sources other than work, such as dividends, for example.
In any of these circumstances, when should you expect your SSDI benefits to be taxes? The Internal Revenue Service (IRS) says that SSDI benefits can become taxable when half of the SSDI benefits, plus additional income, exceeds the set threshold according to your tax filing status. Your SSDI payments may be taxed if your income exceeds these base threshold amounts based on your filing status:
- $25,000 when you are single, head of household, or a qualifying widow or widower (this means one-half of your SSDI payments plus all other income exceeds $25,000);
- $25,000 when you are married filing separately, and you have lived apart from your spouse for the entire year (this means again that one-half of your SSDI payments plus all other income exceeds $25,000);
- $32,000 if you are married filing jointly (this means that one-half of your SSDI payments, plus any other income you earn or that your spouse earns, exceeds $32,000);
- $0 if you are married filing separately but lived with your spouse at any point during the last year.
How Much Tax to Expect
If your SSDI benefits are taxable, how much should you expect to pay in taxes? The answer to that question will depend upon your filing status, as well as the total amount of taxable income you have. A disability benefits lawyer can provide you with information about your specific situation.
It is important to note that, unlike SSDI benefits, SSI benefits are not taxable. Accordingly, it is critical to understand the distinction between SSDI and SSI benefits when you are planning for income taxes. An
Contact an SSDI Disability Benefits Lawyer
If you have questions about taxes and your SSDI benefits or questions related to other resources in addition to long-term disability benefits, you should seek advice from an SSDI benefits attorney who can assist you.
