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Are SSDI Payments Taxable?

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.