Supplemental Security Income (SSI), benefits are never taxable. However,
sometimes, Social Security disability insurance (SSDI) payments are taxable.
Whether or not you have to pay taxes on your SSDI benefits depends on
how much your total income is, and how much income you receive apart from
the SSDI payments. Generally, if the SSDI benefits are your only source
of income, you will not have to pay federal income taxes.
Here’s the breakdown of the SSDI taxable benefits:
If You Are Single
For individuals receiving SSDI payments, you may have to pay taxes if your
total income exceeds $25,000 per year. Generally, if your income is between
$25,000 and $34,000, you will only have to pay federal income taxes on
about 50% of your SSDI payments. If your income exceeds $34,000, you will
have to pay taxes on 85% of your SSDI benefits.
If You Are Married
Federal income taxes take into consideration your spouse’s income
when determining how much you will have to pay on your SSDI benefits each
year. For couples, the SSDI benefits are taxed if their total amount of
income is more than $32,000. This includes all forms of income.
SSDI taxes for married couples are as follows:
- If you and your spouse’s income is between $32,000 and $44,000, you
will have to pay taxes on 50% of your SSDI benefits.
- If you and your spouse’s income is above $44,000, you will have to
pay taxes on 85% of your SSDI benefits.
What About Lump Sum SSDI Payments?
Sometimes, you may receive lump sum payments when your SSDI benefits are
first approved. These payments may include back pay and retroactive benefits.
If you receive lump sum payments, you will have to pay taxes on them in
the year you receive them. You will not have to pay taxes for the years
for which the benefits are granted.
The amount of the lump sum that you must pay taxes on depends on various
factors. Regulations try to make sure you pay taxes at the same rate you
would have paid if you had been receiving the benefits on a regular basis.
For any lump sum or SSDI benefit payment, it is important to analyze your
financial situation and consider the amount of taxes you will need to pay.
Call Our Detroit Social Security Attorneys Today at (248) 793-2010
At Goodman Acker P.C., we provide diligent services to clients facing a
variety of social security legal issues. With more than 75 years of combined
legal experience, we can analyze your situation and work hard to determine
an effective strategy for your case. Our Detroit Social Security lawyers
are committed to meeting clients’ legal needs. If your Social Security
claim has been denied, or you are facing other problems getting SSDI benefits,
we are here to help.
Contact our firm today for a free case review.