SSDI Retroactive Payment

Hi. I have been declared disabled by Social Security Disability. This was a recent decision and it was decided that I became disabled 6/2020. As such, SSDI awarded retroactive funds to my account of ~$60,000. Can you tell me if this is taxable? If so, what amount of money should be saved for taxes? As a non-employed, disabled person, I cannot risk being in a situation where I owe money to the IRS next year. My income is solely SSDI and non taxable LTD payments from The Hartford. Thanks for your assistance. Sincerely, Mary

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Employee Tax Expert

Nov 16, 2022 3:54:09 PM

Hello Kris904/Mary,

Is Social Security Disability Income Taxable?

For 2022:

As a single filer, you may need to include up to 50% of your benefits in your taxable income if your income falls between $25,000 and $34,000.
Up to 85% gets included on your tax return if your income exceeds $34,000.

Social Security disability:

Social Security disability benefits may or may not be taxable depending on how much other income you (and your spouse, if you're married) may have. In general, though, if Social Security disability is your only source of income, your benefits aren't taxable. Internal Revenue Service Publication 915 provides further details on determining whether your benefits are taxable.

You are able to spread out the lump sum payment received for a retroactive award.

How do I use publication 915 to report SSDI lump sum payments?

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SSDI Retroactive Payment