If you are filing for disability or if you are on disability benefits, you need to know what counts as income before filing your tax return for 2022. Each year we see claimants affected by the consequences of filing incorrect income, especially self-employment income, on their tax returns. In many cases, these returns are filed without the filer having knowledge of how it will affect a claim for disability.
If you have filed a claim for Disability Insurance Benefits (DIB) or Supplemental Security Income (SSI), the earnings you report on your tax return can and will affect your claim for benefits. If you have worked and earned income, it is important to file your taxes and report that income accordingly. However, if you have not worked or earned very little income but report an inflated amount of self-employment income in order to receive an Earned Income Credit (EIC), your past due benefits WILL be affected.
You may ask how to look for signs that a fraudulent return is being filed. You can usually know you are being lured into falsely filing self-employment for large income tax returns when you did not earn a lot of money. Additionally, the tax preparer might want you to embellish your earnings in order to get a bigger return. Doing this can cause you to lose all disability benefits for that tax year. Some tax preparers lure people with enticing tax returns and they themselves also get a cut of your return. If you did not work, you should not be filing self-employment income.
If you did work, the earnings reported for the W2 or 1099 you received are listed correctly on the return. Watch for self-employment income listed. If so, you must determine whether you performed the amount of self-employment listed and make sure the job you performed is listed properly. Make sure the earnings listed are correct and you can prove those earnings through receipts or bills.
EIC is used when your income is lower than EIC limits and you have dependents. Many parents who file head of household with dependents file EIC legitimately. However, if you did not work and do not have income to report, you cannot make up self-employment in order to file EIC. Additionally, filing an erroneous EIC credit can cause you to be ineligible to file that credit again for 2 or 10 years, if it is determined to be fraudulent or erroneous.
Please consult with your tax preparer regarding your claim for disability benefits, and if you need additional tax advice, contact a qualified tax attorney. Also, keep a copy of your tax return if you have a claim pending for disability as this will be requested by the Social Security Administration. We are not tax attorneys and recommend you consult with a local tax attorney if you need further guidance in processing a tax return.
Call 251-343-1111 for a free consultation regarding Social Security disability. Gardberg & Kemmerly specialize in helping the injured and disabled in Alabama, Mississippi, Florida and Louisiana.