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Is Social Security Disability Income Taxable?

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Social Security disability benefits are taxable. However, a lot of the recipients of Social Security don’t end up paying taxes on their disability benefits because they don’t earn enough to tax. Research shows that more than 30% of Social Security disability recipients do pay taxes. Recipients are most often taxes when they’re combining their income with that of their spouse or if they have other sources of income in addition to their Social Security Disability benefits. It is important to note that Supplemental Security Income is not subject to taxes.

Social Security Disability Income and Federal Taxation

If you are married and you receive Social Security disability income, you will be taxed if both your incomes are more than $32,000 per year. On the other hand, for single people, your income will be taxed only if it is more than $25,000 per year. In both instances, only a portion of the Social Security disability benefits will be subject to tax.

The percentage of your Social Security disability income that is taxed is dependent on how much you earn. You must also note that if your income is subject to taxation, it will be taxed using your marginal income tax rate. This means that you will be taxed on 15-25% of your benefits. To understand how this works in detail, you can consult our disability law group, Giodosik Morse Disability Law Group.

Taxation on Social Security Disability Back Pay

If you receive backdated payments for your Social Security disability benefits, you will have to pay backdated taxes. This happens if you apply for disability and it takes a while for you to be approved. If you don’t understand how to calculate the amount of back pay, you can consult our disability law group to help you out. There are a lot of technicalities, especially when it comes to backpay.

State Taxation on Social Security Disability Benefits

The majority of states do not tax Social Security disability benefits. However, there are several states which impose taxes on these benefits. Among these states, there are some that utilize similar income brackets like those used by the federal government for the taxation of Social Security disability benefits. The remainder of the state has developed its own system of taxation. Therefore, it is important to check with our disability law group to find out how the taxation of SSDI is carried out.

Generally, Social Security disability benefits will only be taxed if you have supplementary income that exceeds a certain threshold. However, most people do not end up paying taxes if they don’t have any other source of income. In most instances, Social Security is only meant to replace 40% of an individual’s income.

For more information about how Social Security disability benefits and SSDI work, or for legal assistance applying for SSD, contact our legal team at Giodosik Morse Disability Law Group today.