Although Social Securitydisability benefits (SSDI) can be taxed, most beneficiaries don’t have much additional income, so they usually don’t have to pay taxes on their benefits.
Nonetheless, a third of Social Security disability users do pay taxes, frequently as a result of their spouse’s or other household members’ income. Benefits from Supplemental Security Income (SSI) are not taxed.
This is how it goes. A portion of your SSDI benefits will be taxed if you are married, file jointly, and have combined income of more than $32,000 per year (which includes half of your SSDI benefits).
A percentage of your SSDI benefits will be taxed if you’re single and earn more than $25,000 annually, which includes 50% of your SSDI benefits.
The amount of your SSDI payments that are subject to tax depends on how much money you make. You may see whether your SSDI benefits will be taxed and the maximum amount of SSDI that could be taxed in the following chart with monthly income amounts.
It can be difficult to determine how much of your SSDI benefits will really be taxed if you earn more than $2,083 per month. The computations can be done using the Social Security tax calculator or the IRS Form 1040 tax return.
How does Social Security Disability Backpay work?
Substantial lump-sum SSDI back payments might increase your income for the year in which you receive them, resulting in you paying more taxes than you should on your back pay.
The IRS permits you to cut your income for the year you get the lump amount by applying the SSDI benefits owed from a preceding year to earlier tax returns, preventing you from losing some of your backpay in this manner.
You could alter your tax returns for two earlier years to claim some of the income there rather than in the current year, for instance, if you were eligible for disability benefits for 22 months before you received your back pay.
