Critical Tax Information For Social Security Disability Beneficiaries

Tax Information For Social Security Disability Beneficiaries

The deadline for filing your federal and state taxes is right around the corner, and there is tax information for Social Security disability beneficiaries that you need to know. Many Social Security disability (SSD) beneficiaries and applicants mistakenly believe their payments aren’t subject to taxation, but this is not true. Just because your income comes from the federal government doesn’t mean it isn’t taxable. According to the Social Security Administration (SSA), approximately one-third of current Social Security disability beneficiaries pay taxes on their payments.

It can seem difficult for Social Security disability beneficiaries to file their taxes with the Internal Revenue Service, as they aren’t given a W-2 telling them exactly how much money they earned. The Disability Benefits Center, an independent website, notes beneficiaries do receive form SSA-1099, which will give you the information you need to file your taxes.

Having the information you need to file your taxes correctly can help you avoid an IRS audit or needing to pay back some of your payments. Even if you have already filed your taxes, knowing how your Social Security disability (SSD) benefits impact your taxes will help you in the future. Those considering applying for Social Security disability benefits should understand how taxes will influence your Social Security disability benefits.  Many current beneficiaries seek out professional tax help the first year they receive benefits, according to the Disability Benefits Center.

Here are the three things you need to know about your Social Security Disability benefits and your taxes:



Who Is Exempted
According to the IRS, only certain beneficiaries have taxable payments. To determine if yours is taxable, the IRS says you can look at the base amount for your filing status and compare it with the total of either all of your other income, which includes any tax-exempt interest, or one-half of your benefits. The exact dollar amount varies depending on if you are going to file an individual or joint return, as well as your total income amounts and filing status. For many, working with a tax professional or financial advisor makes determining your taxable amount easier.

However, a good rule of thumb is to know that if you don’t earn more than $25,000 a year as an individual or $32,000 as a family, then you may not have to pay taxes.

How To File
Social Security disability beneficiaries can file either individual or joint returns. According to the Social Security Administration, those who wish to file as an individual should know:

  • If your combined income is between $25,000 and $34,000, there is the chance you could pay tax on approximately half of your benefits
  • If your income amount exceeds $34,000, your taxable amount may be as high as 85 percent

Those who wish to file a joint return will need to follow certain stipulations as well.

  • If the combined income of both you and your spouse is between $32,000 and $44,000, you could pay tax on up to half of your benefits
  • If your combined earnings is more than $44,000, the taxable amount increases to 85 percent

The Social Security Administration says married people can file individual returns. It is important to follow any and all rules regarding this.

What Can Be Withheld
Those applying for Social Security disability benefits can ask the Social Security Administration  to withhold federal taxes from their benefits, according to the Social Security Administration. For many, this may be an easier plan of action as it simplifies the process. Even if beneficiaries are not currently having part of their Social Security disability benefits withheld, the Social Security Administration says they can fill the IRS form W-4V. If you would like more information on how to apply for Social Security Disability Benefits in general, it may be beneficial to contact a attorney or advocate who can further assist you with the process,

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