I understand how/if Social Security Disability is taxed.
~50% Taxable if: half SSD + AGI > $25,000
~85% Taxable if: half SSD + AGI > $34,000
My question is: if my SSD is taxed (let's say 85%), will that taxable amount be added to my total AGI thus (potentially) increasing my tax bracket? Or, is that 85% just taxed at my current tax bracket based on other income?
For example, filing single:
if adjusted gross income is $30,000 putting me in the 12% tax bracket
and if SSD is $28,000 (half: $14,000); therefore 85% taxable because $14,000+$30,000 is greater than $34,000.
85% Taxable SSD would then be $23,800.
Question: Is that $23,800 also taxed at 12%, or is it added to the $30,000 which would bump me into the 22% tax bracket for the amount above $38,700?
Hi Drew! It could bump you into the next tax bracket. But, the tax rates are a tiered system, so only the amount above the previous income/tax bracket will be taxed at the next level of tax rate. You can find those tax brackets with income ranges/rates at this FAQ. What are the federal tax rates for 2018?