Is Social Security Disability Taxable?

Now that the end of the year is approaching, now is the time that many start thinking about filing your taxes for the upcoming year. For those receiving Social Security Disability benefits, this can create unexpected challenges. What are you supposed to do about reporting your Social Security benefits on your personal tax return? 

Though you may not be receiving any regular income from a job, you might be wondering if your SSDI income counts toward filing for taxes. The answer can vary depending on your income, your spouse’s income and the state in which you reside. Let’s take a look at some of the factors that impact your taxes and SSDI. 

Does SSDI impact my taxes?

The short answer is yes, SSDI will make some changes in the way you file taxes. If you are receiving disability benefits, you likely do not work. That being said, you may still be receiving some form of income through investments or a spouse’s income. Generally, your benefit will not be taxable unless 1/2 of your benefits plus all of your other income is greater than the base filing status amount. SSDI is taxed if your adjusted gross income exceeds $12,000 if you are single, head of household, a widow(er), or married filing separately if you and your spouse have lived apart for the entire year. The amount raises to $24,400 if you are married filing jointly. If you are married, you must file jointly — if you file separately while being married, your base amount for filing is $0. 

When you are filing taxes, be sure to include every source of income you have between you and your spouse. This includes any benefits your spouse receives as well as any interest or investments you have. Note that SSI income is exempt from taxation, so do not worry about including that data. If your total amount is over the base amount for filing, you will have to pay taxes on your benefits. 

Questions about your taxes

Still need more information? We’ve answered some of the most common questions for you below: 

Do I have to file state taxes too?

This answer varies depending on what state you’re in. There are 13 states that tax Social Security benefits, including Kansas and Missouri. For Missouri residents, you only have to file if your adjusted gross income is over 85,000 for single persons or 100,000 for married couples. 

Do I need to fill out a different tax form?

Yes, you will need to fill out the SSA-1099, a form that specifically covers your SSDI benefits. 

How much will I have to pay in taxes?

If your income exceeds the base amount for filing, your benefit will be treated like any other income. You will pay taxes relative to your tax bracket, and you will be taxed on a marginal tax rate where the first portion of your income is taxed at a different rate than the second portion of your income. Ask your accountant about how this impacts your income. 

How are my taxes impacted if I receive back pay?

For some, receiving back pay could bump you into a higher tax bracket or make it so that you are now over the filing amount. In this case, you may be able to go back and amend previous tax returns to show what your income would have been if you had received disability benefits at that time. This can help you to avoid most major tax consequences that come with receiving a lump sum back payment. 

Please speak to a CPA or tax planner for more details on reporting Social Security Disability Income for tax purposes. 

Do you have questions about filing for disability? 

Contact Reynolds & Gold. We have years of experience helping people to receive the disability benefits they deserve. 

An older, differently abled woman is being supported by a volunteer.