- Disability income from an employer and benefits from a disability insurance policy your employer paid for are typically taxable. Benefits from an insurance policy that you paid for with after tax money are typically not taxable.
- If Social Security disability is your only source of income, your benefits usually aren't taxable. However, if you (and your spouse, if you’re married) earn other income, your benefits may be taxable, depending on your income level.
- If your disability income is taxable, you may qualify for the federal Credit for the Elderly and Disabled. To qualify, you must be permanently and totally disabled and meet certain income requirements.
- You may be eligible for the Child and Dependent Care Credit if you (or your spouse if filing a joint return) paid someone to take care of a qualifying person with a disability, including yourself or your spouse, so that you or your spouse could work.
Tax Tips for legally disabled taxpayers
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