I thought SSDI was taxed at a lower rate than regular SS but I don't see any distinction between them in TurboTax for 2020. Can someone clarify that for me?
Up to 85% of Social Security Retirement/Disability/Survivors benefits becomes taxable when all your other income plus 1/2 your social security reaches:
- Married Filing Jointly - $32,000
- Single or Head of Household - $25,000
- Married Filing Separately - 0
SSDI is taxed exactly the same as Social Security retirement benefits. There is no distinction in TurboTax because there is no distinction in the tax law. I don't know where you got the impression that they are treated differently.
Does TT automatically detect and calculate the correct percentage that is taxable?
Yes, you enter the full amount from box 5 of your Form SSA-1099. TurboTax automatically calculates the taxable amount. On Form 1040 the total amount that you received is on line 6a and the taxable amount is on line 6b. You can see the calculation on the Social Security Benefits Worksheet.
Mixing up SSI and SSDI is a common error ... one gets a SSA-1099 issued in January because it can be taxable and the other doesn't.
SSI is Supplemental Security Income and is not from the Social Security Administration. It is designed to help aged, blind, and disabled people, who have little or no income; and. It provides cash to meet basic needs for food, clothing, and shelter. SSI is not reported on a tax return.
Social Security Retirement/Disability/Survivors (SSDI & SSA) benefits are reported on a form SSA-1099 and the benefits received are reported on a federal tax return and can be up to 85% taxable.
However, if the Social Security benefits are the Only income to be reported on the tax return, then there is no reason or need to file a tax return.
To enter Social Security benefits reported on form SSA-1099
- Click on Federal Taxes (Personal using Home and Business)
- Click on Wages and Income (Personal Income using Home and Business)
- Click on I'll choose what I work on (if shown)
- Scroll down to Retirement Plans and Social Security
- On Social Security (SSA-1099, RRB-1099), click the start or update button
Or enter social security benefits in the Search box located in the upper right of the program screen. Click on Jump to social security benefits
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