SSDI

[Halex74]

Are SSDI benefits taxable?

[xmasbaby0]

If your Social Security Disability Income is your ONLY income, it is not taxable and you do not have to file a return.   If you have other sources of income, then you may need to file and your SS may be taxable, depending on how much other income you have.

TAX ON SOCIAL SECURITY

Up to 85% of your Social Security benefits can be taxable on your federal tax return.  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. 

 What confuses people about this is that before you reach full retirement age, if you continue working while drawing SS, your benefits can be reduced if you earn over a certain limit. (For 2019 it was $17,640— for 2020 it was $18,240; for 2021 it was  $18,960.  For 2022 it was  $19,560  —  for 2023 $21,240)

After full retirement age, no matter how much you continue to earn, your benefits are not reduced by your earnings; your employer will still have to withhold for Social Security and Medicare.  If you work as an independent contractor then you will pay self-employment tax for Social Security and Medicare.

To see how much of your Social Security was taxable, look at lines 6a and 6b of your 2022 Form 1040

https://ttlc.intuit.com/questions/1899144-is-my-social-security-income-taxable

https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable

You need to file a federal return if half your Social Security plus your other income is $25,000 when filing single or head of household, or $32,000 when filing married filing jointly, $0 if you are filing married filing separately.

Some additional information:  There are 11 states that tax Social Security—Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont  These states offer varying degrees of income exemptions, but two mirror the federal tax schedule: MN and VT.

[Katherine S 63]

That is a great questions!!

If your income is between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits. more than $34,000, up to 85 percent of your benefits may be taxable.

This link talks more about exactly how the tax is calculated.

https://turbotax.intuit.com/tax-tips/disability/is-social-security-disability-taxable/L5fPDpT4P

• Social Security Disability Insurance (SSDI) benefits may be taxable if you receive income from other sources, such as dividends or tax-exempt interest, or if your spouse earns income.

• If you are married and file jointly, you can report up to $32,000 of income (made up of half of your SSDI benefits plus all of your other income) before needing to pay taxes on your SSDI benefits.

• If you are single, Head of Household, Qualifying Widow(er), or Married Filing Separately (didn't live with spouse), you can report up to $25,000 of income (half of your SSDI benefits plus other income) before needing to pay taxes on your SSDI benefits.

• If you’re Married Filing Separately but lived with your spouse at any time during the tax year, none of your income is exempt from taxation.

If you only have SSDI income, then it would not be taxable.

I sure hope this has been helpful.

If you reply back, I will try to keep an eye open to assist further.

Please give me a thumbs up if this was helpful.

Katie S.