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Are my SSD benefits taxable income?

On Behalf of | Apr 1, 2015 | Social Security Disability

April 15 is just around the corner. Hopefully, all of our readers have filed their income tax returns with the IRS, are ready to file now, or have filed for an extension if necessary.

The IRS considers many sources of funds as taxable income — including most benefits provided by the Social Security Administration. This could have serious tax implications for households that receive Social Security Disability benefits (SSD). However, Supplemental Security Income payments, which are need-based disability benefits, are not taxed, according to the IRS.

To determine whether your SSD benefits may be taxable, the IRS instructs, first determine the base amount for your filing status. A single head of household or qualifying widower has a base amount of $25,000. The base amount goes up to $32,000 if you are married and filing jointly, but drops to $0 if you are married, filing separately and lived with your spouse at any time during the tax year. For a married person who has been separated from their spouse for the entire year and is filing separately, the base amount goes back up to $25,000.

Once you have your base amount, compare it with the sum of half your benefits and all other income, including any tax-exempt interest.

Figuring out your taxes can be confusing, but the IRS provides worksheets to help you figure out what you owe, or you can consult with a tax preparation professional. So too is obtaining SSD or SSI benefits usually easier with the help of an experienced attorney.


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