Yes, it is taxed the same federally as wages are, however, it is reported as Other Income and not subject to Medicare and Social Security Taxes.
How it affects your SSDI taxability, will depend on how much you receive. It is possible that it can make your benefits up to 85% taxable.
If you fall into the following, 85% of your social security is taxable income
- Single with income above $34,000
- Married Filing Jointly with income above $44,000
- Married Filing Separate regardless of income
If you fall into the following, 50% of your social security is taxable income
- Single with combined income between $25,000-$34,000
- Married Filing Jointly with combined income between $32,000 and $44,000
Your combined income is calculated by adding your
- AGI plus
- Nontaxable Interest plus
- 1/2 of your social security Benefits
Social Security Benefits Taxes
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