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Can SSD benefits be considered taxable income?

Tax season is here, and many people in Columbia have either already filed their taxes and received their tax returns or they are in the process of doing so. While those who work earn a clear income that is taxed, those who do not work but receive Social Security disability benefits may wonder whether they must report these benefits as income.

There are instances in which a person's SSD benefits will be taxable. Whether they are depends on whether the person has alternate income or on their filing status. It is possible that up to 85 percent of one's benefits could be taxed.

The government will send a person who receives SSD benefits a Form SSA-1099, which will state how much the person received in benefits that year. However, it will not state whether these benefits are subject to being taxed or what percent of them would be. If a person makes under $64,000 a year, they can use the Internal Revenue Service Free File to file their income tax return online and this program will determine what portion of their benefits are taxable.

That being said, it is possible to estimate what proportion of one's benefits will be taxed by adding 50 percent of one's SSD benefits with all other sources of income, and then comparing that total to the base amount of income ($32,000 for those who are married and filing their taxes jointly, and $25,000 for all others.) Whatever is above the base amount may be subject to taxes. However, if a person is married but files separately and resides with their spouse at any point during the tax year, the total amount of their SSD benefits may be taxed. There are also calculations that need to be performed to determine what percentage of one's SSD benefits will be taxed.

This post is for general purposes only and cannot be used as a basis for any tax filing or legal action. Those who receive SSD benefits and have questions about how tax laws affect them may want to seek the advice of an attorney.

Source: 9 News, "Taxation of Social Security and SSDI payments," Feb. 17, 2017

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