When you’re getting disability payments from the Social Security Administration, it’s usually a lifeline, a means by which you can stay afloat while dealing with a serious illness or injury. Sometimes it’s so you can work to get back on your feet, and other times it’s permanent. One of the biggest stressors many people have is wondering if they’re going to have to pay taxes on their Social Security disability payments.
In fact, most SSDI payments are subject to tax, but about 2/3 of recipients end up not having to pay them. Learn about the taxability of your SSDI benefits, under what circumstances you may have to pay them, and how a Social Security disability attorney can help.
SSDI Benefits and Federal Taxes
Essentially, any SSDI benefits you make which raise your total income over a given threshold, become taxable as income. If you make more than $32,000 per year as a married couple or over $25,000 per year as a single person, part of the SSDI payments you receive will be taxable. How much of this depends on your total monthly income.
As a single individual, if you make less than $2,084 per month, you’ll get no taxes from your SSDI. If you make up to $2,833, 50 percent of your SSDI is taxable, and if you make over that amount, 85 percent of your SSDI is taxable. For married couples, the rates are the same (0/50/85), but the thresholds are $2,666, $3,666 and over.
In either case, regardless of how much of your SSDI is taxed, you will be taxed at the same rate as your income tax bracket demands. In other words, that portion is treated as any other kind of income.
State Taxes and SSDI Benefits
Only a very few states actually tax Social Security Disability benefits. California is not one of these states, so if you live in CA, you won’t have to worry about paying additional state taxes on your Social Security.
Sometimes when your SSDI claim takes awhile to resolve, you can get back payments for those months that you were disabled but before your benefits were approved. These back payments can cause your payment to be bumped up above the threshold for taxability. In order to avoid losing part of your back pay, you can apply benefits that were owed from prior years to tax returns in those years, which will have the effect of lowering your current year income.
Taxes and the Social Security Disability Attorney
Dealing with the taxability of Social Security disability benefits can be tricky and complex. The best bet if you’re having any sort of issues with your claim, with figuring out what taxes you need to pay, or how to apply current year benefits to prior year tax returns, a qualified Social Security disability attorney can help.
If you find yourself having this issue in California, Dr. Bill LaTour can help. Give our law offices a call for a consultation on your case, and to make a plan to ensure you get the full SSDI benefits you deserve.