SSDI isn't a needs-based program, which means you may have to pay taxes on a portion of your benefit payments if your income exceeds a certain amount. Though most SSDI recipients don't end up paying taxes on these payments because they don't make enough outside income to exceed this threshold, according to the Social Security Administration (SSA), roughly one-third of beneficiaries do pay some taxes—often due to other household income or a spouse's income.
Whether you'll have to pay taxes on your SSDI benefits depends on your income and tax filing status. For example, your benefit payments are taxable if:
These same factors—income and filing status—also determine what percentage of your benefits are taxable. Here's what you need to know:
Numbers like 50 percent and 85 percent may sound scary, but it's important to remember that they indicate the percentage of your benefits that are subject to taxation—not the rate at which your benefits will be taxed. The tax rate used for your SSDI benefit payments is the same used for your other forms of income.
If you have questions on SSDI tax issues, an accountant can clarify your tax liability.
If you're running into roadblocks in your SSDI case, the talented Social Security disability attorneys with O'Connor Law PLLC can help. Contact us today to schedule an appointment for a free initial consultation with a member of our accomplished legal team.