Do SSDI Payments Affect My Taxes?

As you are preparing to file your income taxes this year, it is important to consider how Social Security Disability Insurance payments (your SSDI payments) could affect your tax liability. While certain kinds of benefits are not taxable, others are indeed taxable. Sometimes the determination of whether or not benefits are taxable depends upon the amount of benefits the recipient receives, or the total income the recipient has for the year including the benefits. In large part, your SSDI benefits could be taxable if you have other sources of income, or if you are married and your spouse has taxable income for the year. Our social security disability lawyers can explain in more detail about how SSDI payments can affect your taxes.

When Your SSDI Benefits Can Become Taxable 

According to the IRS, if half of your SSDI payments, plus any other income you have, totals more than a certain threshold based on your tax filing status, then your SSDI payments may be taxable. Here are those thresholds:

• If you are filing as single, as head of household, as a qualifying widow or widower, the threshold is $25,000;
• If you are married filing separately and have lived away from your spouse for the full year, the threshold is $25,000;
• If you are married filing jointly, the threshold is $32,000; and
• If you are married filing separately, but you lived with your spouse during the year, then the threshold is $0.

How does this work in practice? If you are single, you are able to report up to $25,000 of income (one-half of your SSDI payments plus any other income) before you must pay taxes on your SSDI benefits. Similarly, if you are married filing jointly, you are able to report up to $32,000 of income before your SSDI benefits become taxable. However, it is important to note that if you are married and filing separately, but you have lived with your spouse during the year, the threshold is $0, which will result in your SSDI benefits being taxable.

How Taxable Amounts Are Calculated 

How much of your SSDI benefits will be taxed if you are beyond the threshold such that a portion of your benefits will be taxable? The taxable amount will depend upon your filing status, as well as the amount of money you earned beyond the threshold amount.

For single filers, if your income is between $25,000 and $34,000, up to 50 percent of your SSDI benefits may be taxable. Single filers with an income of more than $34,000 can have up to 85 percent of their SSDI payments may be taxable. For married filing jointly recipients of SSDI benefits, up to 50 percent of the benefits may be taxable if income is between $32,000 and $44,000, while up to 85 percent of SSDI payments may be taxable if the joint income is more than $44,000.

Contact a National Disability Benefits Attorney 

If you have questions about SSDI payments and your tax situation, you should seek advice from a national SSDI benefits lawyer today. Contact the Law Offices of Stephen Barszcz to learn more about SSDI benefits or to seek assistance with your application.

Resource:

irs.gov/faqs/social-security-income/regular-disability-benefits/regular-disability-benefits