
Social Security Disability benefits may be taxable if you receive income from another source; however, this depends on the amount of income you receive and your tax filing status. Many people can earn additional income and still avoid taxes on their benefits.
The general rule is that if half of your Social Security Disability Insurance (SSDI) benefits plus your income exceeds a specific threshold based on your filing status, you may pay tax. Income can be dividends, tax-exempt interest, or money earned by a spouse.
If you need assistance understanding the laws or regulations governing Social Security Disability, a South Carolina Social Security Disability lawyer can help. Our team has over 50 years of combined experience. Contact us today to schedule a free consultation.
What Is Social Security Disability?
Social Security Disability Insurance (SSDI) provides financial aid to those who cannot work because of a physical or mental disability. Managed by the Social Security Administration (SSA), this program is financed through taxes.
To be eligible for Social Security Disability Insurance, you must have sufficient work credits earned through tax contributions. The benefits you qualify for are based on your lifetime earnings and the contributions made to Social Security throughout your employment.
For those who qualify, SSDI offers monthly payments to help cover living expenses like food, housing, and healthcare. This benefit aims to ensure that individuals with disabilities can maintain a basic standard of living.
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864-235-0234Can You Earn an Income When You Are on Social Security Disability?
You can earn a very limited income while receiving Social Security Disability Insurance, but there are important limits and rules to be aware of. Earning income may affect the amount of benefits you receive, and could impact your eligibility for disability benefits, so we don’t recommend people work at all while applying for or receiving SSDI.
Social Security Disability benefits are taxable once you reach a specific income level. It’s always wise to consult an attorney who understands Social Security Disability regulations before making any decisions that could jeopardize your benefits.
You can also refer to the IRS document “Are my Social Security or railroad retirement tier I benefits taxable?” to help you understand your tax burden based on your income and filing status.
Thresholds for Paying Tax on Social Security Disability
The amount of additional income you can earn without paying taxes on your Social Security Disability Insurance benefits depends on how you file your taxes.
Half of your SSDI payments plus additional income must be below a base amount established by the Internal Revenue Service.
- If you file as Married Filing Jointly, half of your SSDI plus additional income must be below the base amount of $32,000 to avoid paying tax on your Social Security Disability benefits.
- If you file as Single, Head of Household, or a Qualifying Surviving Spouse, you may report up to $25,000 consisting of half your benefits plus additional income before paying tax.
- If you are Married Filing Separately but did not live with your spouse during the tax year, your base amount is $25,000.
- If you file as Married Filing Separately but live with your spouse or did during the previous tax year, your income is not exempt from taxation.
Figuring out where you stand with your Social Security Disability Insurance benefits and taxes can be confusing, and the above numbers may change in the future. When unsure, it is a good idea to speak with an attorney who knows Social Security Disability benefits.
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864-235-0234Who Qualifies for Social Security Disability?
To qualify for SSD benefits, you must meet specific criteria regarding your work history and health. You need to provide medical documentation that supports your disability. This may include doctors’ reports, test results, and other relevant information.
Work Credits
You must have worked long enough and recently enough to earn sufficient work credits by paying Social Security taxes. Generally, you need to have worked for at least 5 out of the last 10 years, although the specific requirements depend on your age.
The Social Security Administration determines your benefit amount using your Average Indexed Monthly Earnings. The SSA calculates this number using your highest-earning years and then applies a formula to establish your monthly benefit.
Disability
You must have a disability that is severe enough to prevent you from engaging in any substantial gainful activity. The disability should be expected to last for at least one year or result in death.
The SSA adheres to a strict definition of disabilities that qualify for SSDI. If your condition is listed, you may receive faster approval. However, if your condition is not listed, the SSA will evaluate whether it is equally severe and disabling.
Supplemental Security Income
Supplemental Security Income (SSI) Disability is a federal program that offers financial assistance to individuals who are disabled, blind, or elderly and have limited income and resources. It is based on need and does not depend on work history.
Supplemental Security Income helps individuals with very low income and limited resources, regardless of their employment history. Unlike Social Security Disability Insurance, SSI is not subject to taxation.
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Contact UsGet Help With Your Social Security Disability Benefits
Social Security Disability benefits are taxable when half of your benefits plus income from another source meets a base amount established by the Internal Revenue Service. Additional income can be from dividends, tax-exempt interest, or your spouse’s wages.
You earned your Social Security Disability benefits by working hard every day for a long time. Now that you need help, the income your benefits provide has the potential to make a positive difference in your life.
Comply with tax laws to keep your benefits in good standing. At Pilzer Klein, our firm has the experience and knowledge to offer the guidance you need. Contact us today to schedule a free consultation and find out how we can help.
Call or text 864-235-0234 or complete a Free Case Evaluation form