What You Need to Know About Taxes and Disability Benefits

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Now is the time to get ready for tax season. If you’re receiving disability benefits from the Social Security Administration it’s important that you understand how your disability benefits are taxes and how to file taxes when disability benefits are your primary income. It’s also important to know how disability benefits impact the any tax credits that you might quality for.

Types of Disability Benefits and Taxes

In most cases disability benefits from the SSA are not taxable. If disability benefits from the SSA are your only income they are not taxable. If you and your spouse both get disability benefits and neither of you has other income then the combined benefit amount is not taxable. Also, if you receive a benefit from private disability insurance and you paid the premium for disability insurance yourself with after tax money those benefits are not taxable.

But, if you receive disability benefits from the SSA and you have other income sources your benefits may be taxable. And if you receive private disability insurance benefits and your employer paid the disability insurance premium the benefits you receive may be taxable. You should check with a professional to see whether or not your benefits are taxable.

If you are receiving disability benefits and your benefits are taxable but you are disabled and can’t work you may qualify for the Tax Credit for the Elderly and Disabled. If you qualify for this exemption, then your benefits will not be taxed as long as your doctor certifies that you are fully disabled and unable to work.

Working and Taxes with Disability Benefits

If you work and receive disability benefits your disability benefits from the Social Security Administration may be taxable. New rules that went into effect in 2020 state that individuals who earn more than $25,000 in yearly income or married couples that earn more than $32,000 in yearly income and receive Social Security disability benefits can be taxed on that income.

The IRS considers your yearly income to be half of your disability benefits plus the full amount of your other income for tax purposes.

If you are single and rely on disability benefits as your primary income or if you are married and your spouse doesn’t work full time or earns minimum wage then your disability benefits are not taxable.

Saving Money with Disability-Related Tax Breaks

There are many ways that you can lower your tax bill or increase the amount of refund by taking advantage of any tax breaks that you qualify for. If you have children you can see if you qualify for the Earned Income Tax Credit, which can significantly increase your refund.

If you make any home modifications related to your disability like adding on a wheelchair ramp, widening hallways, installing modified bathtubs or toilets, or any other modifications that are necessary for your health and safety you can qualify for a tax credit for those modifications.

If you need to hire home health care providers to help take care of you or your spouse there is a tax break that you can qualify for called the Child And Dependent Care Credit.

The Tax Credit For The Elderly And Disabled can also help you. You qualify for this credit if your doctor has certified that you won’t be able to work for at least a year.

Tools for Easy Tax Filing

Filing taxes can be confusing and nerve-wracking, but there are tools and programs designed to simplify tax filing for people who have disabilities. The government has created a free tool that you can use as long as someone in your household is receiving disability benefits. Using tools and programs can make filing taxes much simpler and easier for people who are disabled and receiving disability benefits. When you use one of these tolls you can be sure that your taxes are filed correctly and that you won’t end up owing a lot of money because of a mistake.

Planning Ahead for Tax Season and Beyond

Taxes are due by April 15th each year. But, you should start preparing for tax time now. If you need help it will be easier to get quality help if you start the process of filing early. And, if you’re due a refund you can get your refund faster if you file your taxes early.

You can start speaking with tax experts now. Make sure that you have copies of all your financial documents and that you’re up to date on new tax laws. Talking to a professional is the best way to get advice on your particular circumstances.


Planning for tax season isn’t a lot of fun, but it’s something that you should start now. Waiting until the last minute will make it harder to see a financial expert and make sure that your taxes are filed correctly. Not filing your taxes correctly could result in a late refund or other problems, so start planning now and make an appointment with a tax pro today.

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