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Income Taxes And Social Security Disability Benefits

By Kenton Koszdin on May 14, 2018 | In Disability Insurance

Income Taxes And Social Security Disability Benefits

Recipients of social security benefits often ask whether and to what extent their benefits are taxable at the federal level. First, social security disability benefits are taxable. This doesn’t include supplemental security income (SSI) benefits, which are not. The taxable portion of the benefits that is included in a recipient’s income and used to calculate any income tax liability depends on the total amount of income and benefits for the taxable year.

If a benefit recipient is married and files a joint return, the taxpayer and spouse must combine their incomes and the amount of social security benefits to calculate the taxable portion of any social security benefits. Even if a spouse didn’t receive any benefits, the spouse’s income must be added to the recipient’s income when making this calculation. If subject to any federal tax, the resulting tax would be based on a taxpayer’s resulting tax rate based upon a taxpayer’s level of taxable income.

No amount of Social Security disability income (SSDI) is taxable if half (50%) of this amount plus all other income is less than:

  • $25,000 if the benefit recipient filed as single, head of household, or married filing separately, and lived apart all year from a spouse
  • $32,000 if the benefit recipient filed as married filing jointly

Up to 50% of SSDI is taxable if the amount of income is more than these amounts. Also, up to 85% of SSDI is taxable if half of SSDI plus all other income is more than:

  • $34,000 if the benefit recipient filed as single, head of household, or married filing separately, and lived apart all year from a spouse
  • $44,000 if the benefit recipient filed as married filing jointly
  • $0 if the benefit recipient filed as married filing separately, and lived together with a spouse at any time during the year

For most people, after these calculations are made, the end result is that their social security benefits are not taxable. This is typically true whether they have any other income other than their benefits. If a benefit recipient has other substantial income, there exists the possibility that benefits may incur some federal taxation. Remember that a taxpayer never pays tax on more than 85% of social security benefits.

An injury, illness or disability may prevent anyone from performing his or her job to the best of his or her ability. My office is here to protect those who are injured on the job. My office is here to protect those who are disabled, sick, ill and unable to work. The primary goal of the Kenton Koszdin Law Office is to help our clients get as well as possible physically and financially. Contact the Kenton Koszdin Law Office today for a free consultation. We even offer free in-home consultations! Call 800-438-7734 or visit us online. It will be a pleasure to hear from you. Se habla espańol!

 

 

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