When you receive Social Security Disability (SSD) benefits from the federal government, it is considered part of your household income. A portion of the benefits are taxable, based on your filing status and full income for all members of the household.
To help recipients determine their tax liability for SSD benefits, the IRS has established the following base income levels for each filing status.
- $25,000 for single payers, heads of household, or widowers
- $25,000 for married recipients filing taxes separately
- $32,000 for married couples filing taxes jointly
- $0 for married individuals who file separately and lived with their spouse at any point during the tax year
If you earn more than the base amount for your filing status, you are required to pay taxes on all or part of that income. When you file as a married couple, your income is based on the full combined income of both you and your spouse, including SSD benefits. This is true even if your spouse does not receive Social Security income.
Calculating Social Security Disability Taxes for Federal Tax Filing
When calculating your tax liability for Social Security Disability benefits, you need to know your household’s gross annual income. The IRS has created a calculation tool that can help you determine the percentage of your SSD benefits that should be taxed, based on your annual household income.
If you are not sure whether you are calculating taxes on your benefits correctly, speak with a tax specialist or a Social Security Disability attorney. They will be able to guide you through the tax process, so you don’t miss important information.
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Social Security Disability Taxes Vary on the State Level
Each state has a different tax policy when it comes to Social Security retirement and disability benefits. The state of Georgia, for example, does not charge taxes on any Social Security income, according to the Georgia Department of Revenue. Other states may require that you pay income tax on a certain percentage of your SSD benefits.
To be sure that you have the information you need to file accurate state and federal tax returns, don’t hesitate to reach out to a tax professional or lawyer who specializes in SSD claims.
Why You Should Seek Professional Tax Assistance for Your SSD Income Taxes
Many people who have just begun to receive SSD benefits try to complete taxes on their own. After all, if your income has always been easy to file under a simple 1099, why spend extra money on an accountant? While it may be tempting to take care of the taxes yourself, SSD taxation laws and regulations can significantly complicate the process. When you file without consulting an expert, you risk losing money to overpayment or penalties from underpayment.
If you consult with an SSD attorney or tax filing professional, you obtain the correct information right away, so you know you are paying exactly what you need to. In addition, your tax professional will be aware of write-offs and credits that you may not know to apply. In the long run, you may actually save money by paying someone to complete or review your taxes.
The Difference Between Social Security and Social Security Disability
When you complete your taxes for Social Security income, you may find many documents that refer to Social Security retirement or other Social Security benefits. While Social Security Disability often falls within that purview, the income you receive from SSD may be categorized differently for tax purposes. It is therefore important to understand the differences between the two.
Social Security retirement benefits are paid to individuals who have reached full retirement age. The amount of this benefit is determined based on a percentage of your lifetime earnings and the age at which you begin to collect benefits.
Social Security disability benefits are provided to individuals with qualifying disabilities. The Social Security Administration (SSA) has established strict guidelines for adults and children to be eligible for SSD benefits. If you meet these requirements, you can apply for SSD benefits even if you are not yet at retirement age.
Other Social Security benefits include payments to surviving family members of workers who passed away and dependents of beneficiaries of SS benefits.
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Speak with an SSD Attorney at Bader Scott Injury Lawyers
Whether this is your first time filing taxes for SSD benefits or you’ve been handling them for years, the SSD attorneys at Bader Scott Injury Lawyers can help you sort through the latest tax laws and updates for SSD income taxes.
We have extensive experience with SSD claims and are happy to assist with every aspect of the process, from your initial disability claim through appeals and tax filings. Contact us today with your SSD questions.