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Do You Need to Pay Tax on Your Social Security Disability Benefits?

Published on February 21st, 2020

Social Security Disability benefits are taxable. Whether you must pay the tax is another question. While the benefits are taxable income, if your overall income is under the threshold, the benefits are not subject to federal income tax.

Here are some specifics in answer to our clients’ common questions.

Is Federal Taxation of SSD an Issue for Me?

You must pay taxes to the IRS on Social Security Disability benefits if:

  • You’re filing singly, and your annual income exceeds $25,000, counting 50% of the SSDI benefits you receive.
  • You and your spouse are filing jointly, and your combined annual income exceeds $32,000 per year, counting 50% of the SSDI benefits you receive.

What Forms Do I Need?

You’ll calculate your federal taxes owed using these forms from the IRS:

  • Form SSA-1099 (Social Security Benefit Statement).
  • Your 1040 tax return or your 1040-SR (for seniors).
  • Publication 590-A, if you or your spouse had an employment-based retirement plan and you put money into your IRA in 2019.

Can I Get Help With the Math?

Your income is the big factor in whether you need to pay taxes on SSDI benefits, and how much of the benefits you received is taxable.

If you make more than the threshold income level, the calculation, which you’ll do on your 1040 or 1040-SR (see the worksheet in the here), can be tricky. Try Social Security’s tax calculator now to see how this works. Published by the IRS, it will show you what’s taxable, considering your income.

What About State Taxation of SSDI Benefits?

There’s some good news for New Yorkers. Ours is one of the states that does not tax recipients for the SSDI benefits they receive.

New York does require you to pay state income tax.

What Are the Rules on Social Security Disability Backpay?

Were you disabled but waiting a while for approval? If so, large payments can come later, raising your income and causing you to owe more taxes than you expected or should have to pay.

There’s a fix for this. Imagine you were entitled to Social Security Disability for two years before the entire payment came. You can file amended returns going back two years, claiming some of this new income against those years, rather than having to declare the income (and owe taxes) now.

We Can Help.

If you are seeking legal help with your disability case, we invite you to contact the Law Office of Daniel Berger. We serve clients in the Bronx, Brooklyn, Manhattan and beyond.

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