Are SSDI Benefits Taxed? Attorney for Social Security Answers
As attorneys for Social Security, we don’t just get questions about how to file for SSDI benefits; we also get many questions regarding what happens after the claim is approved.
One such question is, “Are SSDI benefits taxed?”
Let’s answer that question!
Do You Have to Pay Taxes on SSDI Benefits?
According to the IRS, Social Security benefits include retirement, survivor, and disability benefits. These benefits are, in fact, taxable (unlike SSI payments, which aren’t taxed). This means you might have to pay taxes on your SSDI benefits.
However, just because SSDI benefits are taxable, doesn’t mean your benefits will be taxed. Confused? Let us explain.
Whether or not, and how much, your SSDI benefits are taxed at the federal level depends on your income level and your tax filing status. Here’s how taxing SSDI benefits works:
- If you are married and you file jointly, and you and your spouse receive more than $32,000 per year in income (including half of your Social Security Disability benefits), part of your SSDI benefits are taxed.
- If you are single, head of household, or a qualifying widow(er) and you have receive more than $25,000 in income per year (including half of your benefits), part of your SSDI benefits are taxed.
- If you are married filing separately and have lived apart from your spouse for the entire year, and you have receive more than $25,000 in income per year (including half of your benefits), part of your SSDI benefits are taxed.
- If you’re married filing separately and lived with your spouse at any time during the tax year, and you receive more than $0 in income per year (including half of your benefits), part of your SSDI benefits are taxed.
- If you’re married and file a joint tax return, you and your spouse have to combine your incomes and SSDI benefits when determining the taxable portion of your benefits. This is the case even if your spouse didn’t receive any benefits: you must add your incomes together to determine if any of your benefits are taxable.
If you think your benefits will be taxed, you can estimate how much you’ll owe using the IRS Social Security tax calculator.
The good news about SSDI benefits and taxes is that even if your SSDI benefits are taxed, it’s only a portion of the benefits. What’s more, SSDI benefits are taxed using your marginal income tax rate.
Is SSDI Back Pay Taxable?
The Social Security Administration gives successful filers their SSDI benefits retroactively from the date they filed. This is obviously a good thing, since it can take months to be approved, but there is one small caveat. Getting your payments in one lump sum like this can increase your income that year—and increase the amount of taxes you’ll owe on your backpay.
However, the IRS allows you to apply some of that backpay to prior years. You can amend previous tax returns to include the SSDI benefits you were owed that year. That way, you owe less in taxes overall—so you don’t lose too much of your lump sum to taxes.
If you need help amending a prior year’s return, it’s always a good idea to speak to an account or attorney.
We’re Here for You
If you have more questions, we have answers. Our attorneys for Social Security have written extensively about SSDI claims and benefits on the Casper & Casper blog. Here are a few other common questions we’ve answered:
- Do you get disability benefits if you’re not permanently disabled?
- Can you lose Social Security Disability benefits?
- Is it possible to get multiple Social Security benefits?
- Can children get Social Security benefits?
Of course, if we haven’t already answered your question, or you’d like to speak to an attorney for Social Security, you are welcome to contact us.
Need Help Filing? Contact Us Today
When you are experiencing a long-term illness or disability, Social Security Disability benefits can be a lifeline. These benefits help you to pay your bills and cover medical costs.
When you need to file for SSDI benefits, having an attorney on your side can be incredibly beneficial. That’s because the Social Security Disability claims process can be a maze. There is a lot of documentation to gather—covering your personal information, medical records, job history, and more—plus paperwork to fill out and applications to file.
It’s so complex, in fact, that approximately 70% of first-time SSDI applicants are denied—often because of incomplete paperwork or missing information.
Doing all this by yourself while also dealing with a disabling illness or condition can feel impossible. Fortunately, you don’t have to go it alone. At Casper & Casper, our attorneys for Social Security have years of experience and knowledge to use on your behalf.
Contact us today to learn how we can help you successfully navigate the Social Security Disability process.