Do You Have to Pay Income Tax on Social Security Disability?

A woman is filing her taxes.
Image Credit: Rudyanto Wijaya/iStock/Getty Images

Under some conditions, the federal tax rules consider Social Security benefits, including retirement and disability, as reportable income. There's no difference between retirement, disability, spouse or survivor's benefits in this regard. You need to go through a few calculations to figure out what portion of the benefit, if any, should be included in taxable income. Most Social Security disability benefits recipients don't pay taxes on them because they do not have much other income.

Advertisement

Qualifying for Social Security Disability

If you're unable to work due to a physical or mental disability, you may qualify for Social Security disability benefits (SSDI). You must be ​18 years​ of age, and you must have paid into the Social Security system through payroll taxes. There are a minimum number of credits needed, depending on your age, to meet this qualification.

Advertisement

Video of the Day

Social Security grants one credit for every ​$1,510​ in earnings (as of 2021), and allows a maximum of four credits a year. If you don't have sufficient credits, but are disabled, you can apply for Supplemental Security Income. SSI is a means-tested program, and there's a limit to the assets you can have and the income you earn to qualify.

Advertisement

The Disability Benefit Amount

Your SSDI benefit comes monthly, with the amount depending on your lifetime wage record, not on the degree or type of your disability. At the start of each year, in January, Social Security sends you a Form 1099-SSA to report the total amount of disability benefits you collected in the previous year. This information is also furnished to the Internal Revenue Service. SSI payments are not included in taxable income and so are not reported.

Advertisement

Consider also​: Do You Pay Taxes on Social Security?

Reporting Disability Benefits

Your disability benefits may be taxable, depending on your filing status and the amount and type of other income you receive. To make this calculation, you add up any other income you received, including tax-free interest income, and ​50 percent​ of your SSDI benefits. The result is known as "combined income." The combined income amount, and your filing status, determines what percentage of your benefits will be included in your taxable income.

Advertisement

Consider also​: Do You Pay Taxes on Disability Payments?

Calculating Taxed Percentage of Benefits

If you're single and your combined income is ​less than $25,000​, then your SSDI benefits are not included in taxable income. A combined income of between ​$25,000 and $34,000​ means that ​50 percent​ of your benefits are included in taxable income; combined income ​over $34,000​ means ​85 percent​ of your benefits are included.

Advertisement

If you're married and filing a joint return, then ​50 percent​ of your benefits are included in taxable income if your combined income is greater than ​$32,000​; the percentage rises to ​85 percent​ if combined income is over ​$44,000​. If you're separated but lived with your spouse at any time during the year, then the 85 percent rate applies to all income.

Most states do not tax SSDI, but a few do. These states use the same income brackets as the federal government.

Advertisement

references