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Will I have to pay taxes on my SSDI benefits?

by | Feb 3, 2017 | Social Security Disability |

While most of us would prefer to think otherwise, tax season is now officially upon us. This means that sooner than later you will need to start gathering up all of your documents to take to your tax preparer, or sit down at your kitchen table to begin deciphering arcane IRS language and filling out seemingly innumerable tax forms.

Even though Tuesday, April 18 — otherwise known as Tax Day 2017 — is still over two months away, it’s perfectly understandable if there are certain tax-related matters weighing heavily on people’s minds given the impact it could have on their way of life. Indeed, this is undoubtedly the case for many who receive Social Security disability benefits.

Are SSDI benefits subject to federal taxation?

The bad news is that SSDI benefits are indeed subject to federal taxation. The good news, however, is that the majority of disability recipients don’t end up paying any taxes whatsoever given that they don’t have a substantial income.

Indeed, the Social Security Administration indicates that only about a third of SSDI beneficiaries pay federal income taxes.

Which SSDI beneficiaries have to pay federal income taxes?

According to the SSA, the following individuals pay federal income taxes on a portion of their SSDI benefits:

  • Those who file “individual” federal tax returns and have more than $25,000 per year in income (including SSDI benefits)
  • Those married couples who file joint federal tax returns, and have more than $32,000 per year in combined income (including SSDI benefits)
  • Those who file individual federal tax returns despite being married

Is the entire amount of SSDI benefits received subject to taxation?

No, only a portion of SSDI benefits will be taxed at the applicable marginal tax rate. The size of the portion subject to taxation depends upon the size of an SSDI beneficiary’s annual income.

Are SSDI benefits subject to state taxation?

SSDI benefits are subject to taxation in certain states, but not Alabama.

Are Supplemental Security Income benefits subject to taxation?

SSI benefits are not subject to federal taxation.

Here’s hoping the following information has proven helpful and allayed some concerns regarding the upcoming tax season …

If you have questions or concerns relating to SSDI benefits, consider speaking with an experienced legal professional who can provide answers and pursue solutions.


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