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Are Social Security Disability Benefits Taxable?

A common question from people thinking about applying for Social Security Disability (SSD) benefits is whether those benefits are taxed as income by the IRS. As with any question dealing with government programs, the answer is, "It depends."

What it depends on is your total income and your filing status - single, married or married filing separately. If your only income comes from SSD benefits, you will not be taxed, because you will not meet the threshold of taxable income established by the IRS.

Even if you receive other benefits, you will not be taxed unless your income from your SSD benefit plus everything else is more than $25,000 for a single person or $34,000 for a married couple. Whatever your total income, however, no one pays taxes on more than 85 percent of his or her Social Security Disability income.

Here's how it breaks out:

  • If you file a federal tax return as an individual and your income from all sources is between $25,000 and $34,000, you may have to pay tax on up to 50 percent of your benefits. If your income is more than $34,000, you may have to pay tax on 85 percent of your benefits.
  • If you file a joint return and you and your spouse have a combined income that is between $34,000 and $44,000, you may have to pay tax on up to 50 percent of your SSD benefit. If your combined income is more than $44,000, up to 85 percent of your benefits may be taxable.
  • If you are married and file your tax return separately from your spouse, you will probably pay taxes on your benefits.

This is just basic information about the taxability of SSD benefits. To be certain of your specific tax status you should speak to a professional tax preparer.

Remember, most people receiving only SSD benefits have no tax liability because their incomes do not meet the threshold. If you are receiving SSD benefits and have questions, or if you have filed for SSD benefits and are having problems with your claim, do what so many other disabled workers have done - call Binder & Binder® from anywhere in the United States. Tell them your story and find out why they are America's most successful Social Security Disability advocates.

We recommended that you consult with a tax expert about the tax issues discussed. No party assumes liability for any loss or damage resulting from errors or omissions or reliance on or use of this material. For more information, call the Internal Revenue Service's toll-free telephone number, 1-800-829-3676,to ask for Publication 554, Tax Guide for Seniors, and Publication 915, Social Security And Equivalent Railroad Retirement Benefits.

Source: Social Security Administration, Benefits Planner: Income Taxes and Your Social Security benefits."

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