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Are Social Security Disability Benefits and VA Benefits Taxable?

by | Apr 14, 2016 | In The Community, Social Security Disability, Veterans Disability Benefits |

Are Social Security Disability Benefits and VA Benefits Taxable?

April 16th is drawing near and many people wonder if they have to pay taxes on their Social Security disability and VA benefits. Some people who get Social Security must pay federal income taxes on their benefits. This usually occurs when an individual has other income such as wages, self-employment, interest, dividends, etc. However, an individual does not pay federal income tax on more than 85 percent of his or her benefits. You must pay taxes on your benefits if you file a federal tax return as an “individual” and your combined income exceeds $25,000. Combined income is equal to a person’s adjusted gross income, nontaxable interest, and up to 85% of your Social Security benefits. If you file a joint return, you must pay taxes on your benefits if you and your spouse have a combined income of more than $32,000.

As for VA benefits, military retirement pay based on age or length of service is considered taxable income for federal income taxes. However, military disability retirement pay and Veterans’ benefits, including service-connected disability pension payments, may be partially or fully excluded from taxable income. VA benefits that are not taxed include: education, training, and subsistence allowances, disability compensation and pension payments for disabilities paid either to veterans or their families, grants for homes designed for wheelchair living, grants for motor vehicles for veterans who lost their sight or the use of their limbs, veterans’ insurance proceeds and dividends paid either to veterans or their beneficiaries, interest on insurance dividends left on deposit with the VA, benefits under a dependent-care assistance program, and payments under the VA’s compensated work therapy program.

For more information on Social Security disability benefits or VA disability benefits, contact an experienced Social Security disability attorney at Gardberg & Kemmerly, P.C. today at 251-343-1111 for a free case evaluation. Gardberg & Kemmerly, P.C. represents Social Security disability claimants in Alabama, Mississippi, Florida, and Louisiana at all levels of the disability process from initial application to appeals to Federal Court.


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