turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

tankguy
New Member

I have a question about ssdi payments and taxes, if I have a military retirement will that cause my disability payments to be taxed at 50%

I will be married but filing separate

Connect with an expert
x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

2 Replies

I have a question about ssdi payments and taxes, if I have a military retirement will that cause my disability payments to be taxed at 50%

Up to 85% of your Social Security benefits can be taxable.  There is no age limit for having to pay taxes on Social Security benefits if you have other sources of income along with the SS benefits.  When you have other income such as earnings from continuing to work, investment income, pensions, etc. up to 85% of your SS can be taxable. (Please do not confuse this to mean that they will reduce your disability by 50%)

Why are you planning to file married filing separately?  Married Filing Jointly is usually better, even if one spouse had little or no income. When you file a joint return, you and your spouse will each receive the $4050 personal exemption, plus the married filing jointly standard deduction of $12,600 (add $1250 for each spouse over the age of 65).  You are eligible for more credits including education credits, earned income credit, child and dependent care credit, and a larger income limit to receive the child tax credit. 

If you choose to file married filing separately, both spouses have to file the same way—either you both itemize or you both use standard deduction. Your tax rate will be higher than on a joint return. Some of the special rules for filing separately include: you cannot get earned income credit, education credits, adoption credits, or deductions for student loan interest. A higher percent of your Social Security benefits may be taxable.  In many cases you will not be able to take the child and dependent care credit. The amount you can contribute to a retirement account will be affected. If you live in a community property state, you will be required to provide additional information regarding your spouse’s income.  If you are using online TurboTax to prepare your returns, you will need to prepare two separate returns and pay twice.


**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Hal_Al
Level 15

I have a question about ssdi payments and taxes, if I have a military retirement will that cause my disability payments to be taxed at 50%

Social security only becomes  taxable when added to sufficient other income. If you are otherwise required to file a tax return, you do need to enter it in Turbotax (TT). TT will determine the taxable portion.
Social security (including SSDI) becomes taxable when your income, including 1/2 your social security, reaches:
Married Filing Jointly(MFJ): $32,000
Single or head of household: $25,000
Married Filing Separately and lived with your spouse at any time during the tax year: $0

For the first  $9,000 (12,000 MFJ), only 50% of your SS is taxed*. After that 85% is taxed. And gradually the  50% taxed  is replaced with the 85%. It's the government; they make it complicated. See IRS Publication 915. When TT prints out your return, it will provide you with the  IRS social security worksheet showing you how the taxable amount was calculated.  Here’s a copy showing you how the calculation is done:
<a rel="nofollow" target="_blank" href="http://apps.irs.gov/app/vita/content/globalmedia/social_security_benefits_worksheet_1040i.pdf">http:...> If your use form 1040A, instead of 1040, see <a rel="nofollow" target="_blank" href="http://taxtopics.net/ssatax.pdf">http://taxtopics.net/ssatax.pdf</a>

*Note that SS is not taxed at a tax rate of 50%; it's only that 50 % of your SS becomes taxable. The tax rate at that level of income is only 10% and some at 15%.
message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question
Manage cookies