As DoninGA mentions above, if you have no other income than your SSDI payments are not taxable. If you receive SSDI and have other income, some of it may be taxable.
- 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 Surviving Spouse, 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 have no other income as described, you don't have to file a tax return.
The underpayment of tax penalty is not assessed by TurboTax it is assessed by the IRS. It happens when you didn't pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax.
Click here for Estimated Taxes: How to Determine What to Pay and When
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