Seelig Law Offices

Are My Disability Benefits Taxable?

On Behalf of | May 20, 2021 | SSD |

They say there is nothing sure in this life but death and taxes. But it is still somewhat surprising that some Social Security disability benefits are taxable. The Seelig Law team knows every dollar counts when you are a Manhattan area resident relying on Social Security disability benefits, so we are ready to help you maximize your benefits and minimize the amount of taxes you pay on them.

Why Are Some Social Security Benefits Taxable?

Let’s start by clarifying what we are talking about. When we say Social Security disability benefits, we mean Social Security Disability Insurance (SSDI) and Supplemental Security Income (SSI).

SSI is designed to meet the basic needs of people over the age of 65, the blind, and disabled individuals who would otherwise not be able to support themselves. You must have a limited income and limited resources in order to qualify for this program. SSI benefits are never taxable.

SSDI is available to disabled individuals under the age of 65, who have worked a certain number of years, and paid into the Social Security system. You must prove you are disabled under the SSA’s definition of disability in order to qualify for the program. Even if you have substantial assets you may still qualify for SSDI benefits because the program is not income based. SSDI benefits may be taxable depending on what other income and benefits you are receiving.

The government taxes SSDI benefits because they are considered income for tax purposes.

Are My Social Security Benefits Taxable?

The answer to this question is every lawyer’s favorite answer: it depends. Whether your benefits are taxable depends on your total income and benefits for the year:

Your benefits may be taxable if the total of (1) one-half of your benefits, plus (2) all of your other income, including tax-exempt interest, is greater than the base amount for your filing status.

The base amount for your filing status is:

  • $25,000 if you’re single, head of household, or qualifying widow(er),
  • $25,000 if you’re married filing separately and lived apart from your spouse for the
  • entire year,

  • $32,000 if you’re married filing jointly,
  • $0 if you’re married filing separately and lived with your spouse at any time during the tax year.

If you’re married and file a joint return, you and your spouse must combine your incomes and social security benefits when figuring the taxable portion of your benefits. Even if your spouse didn’t receive any benefits, you must add your spouse’s income to yours when figuring on a joint return if any of your benefits are taxable.

This can be confusing if you aren’t a tax whiz, which is why the Seelig Law team is here to help if you need it.

When Winning Matters Most

Every dollar counts when you are relying on Social Security disability benefits to support yourself and your family. The attorneys on the Seelig Law team understand this. We work hard to get you every cent you deserve, and help you hold on to that money when tax time rolls around.

If you’re receiving disability benefits, and you have questions about what portion of your benefits are taxable, we would be happy to advise you. Please contact us today to schedule an initial consultation.