Do I Have to File Taxes When Receiving Disability Benefits?

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There is a famous saying in life, "Nothing [in life] is certain except death and taxes." Coming from Benjamin Franklin in 1789, this quote still rings true over 200 years later. 

As United States citizens, we're all well aware of the fact that we pay taxes on the income we receive. In fact, a part of those taxes is what makes it possible for disabled workers to obtain Social Security disability benefits. But here's the big question: Do people who get Social Security disability benefits have to file taxes? And, do people on Social Security disability have to file taxes on disability income? 

Do People On Social Security Disability Have To Pay Taxes? 

It depends. Whether or not you have to deal with taxes while receiving disability benefits depends on two things: 

  1. How much money you make
  2. Whether your spouse also earns an income. 

If Social Security disability benefits are your only source of income, and you're single (i.e., not married), you may not have to file taxes. However, even in such situations, it's a good idea to file your taxes anyway. This is especially true for people who want to receive certain payments like stimulus checks. 

Do You Have To File Taxes On Disability Income? 

Again, it depends. A good rule of thumb is: If you file a federal tax return as an individual, and your total income is over $25,000, you'll need to pay federal taxes on your disability income. If you're married and file jointly, you'll owe taxes if your combined income with your spouse is more than $32,000. 

Now, the good news is you won't pay taxes on the entire amount of your disability income if you fall into one of these tax categories: 

  • If you're an individual and earn between $25,000 and $34,000 in a year, you may have to pay income tax on 50% of what you receive from the Social Security Administration (SSA). And, if your income is more than $34,000, you could be taxed on up to 85% of your disability benefits. 
  • If you're filing jointly with your spouse, and your combined income is between $32,000 and $44,000, you might owe taxes on 50% of your Social Security disability benefits. If your combined income exceeds $44,000, up to 85% of your Social Security disability income may be subject to taxes. 

While this may seem like a lot of money, there's some good news. This is that 85% is the maximum taxable amount for disability income. This means that you won't have to pay taxes on more than 85% of your disability benefit earnings. 

Oftentimes, it is best to file your taxes jointly with your spouse. This is because filing jointly with your spouse can reduce the amount of taxes you owe. Keep in mind that you may end up having to pay taxes on a portion of your disability payments if you're married but choose to file your taxes independently from your spouse. 

*Something to keep in mind: The SSA doesn't have to hold your taxes back from your Social Security disability payments. This is because the SSA is not required to do so. 

However, if you anticipate owing taxes on your disability benefits, you can ask the SSA to withhold those taxes for you. This means they'll take care of your tax situation by withholding your taxes from your benefits directly. To set this up, get in touch with your local Social Security Office which can help you set it up. 

To find out an exact estimate of how much money you could receive from disability benefits, use our Social Security benefits calculator.


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