If you are receiving disability benefits from Social Security, you may be a little confused about the process come tax time. What portion of your benefits is taxable, if any? What happens if you had to repay your benefits to a private insurance carrier? Are you eligible for any additional tax deductions or credits? Here is some basic information to get you started.
Are Your Disability Benefits from Social Security Taxable?
A portion of your Social Security disability benefits will be taxed if your earnings, which include your benefits, are over the base amount set by the government. You can calculate your earnings by using the Social Security and Equivalent Railroad Retirement Benefits Form 915.
Just to get an idea if your benefits will be taxable, here are a few of the guidelines.
- $25,000 if you are single, the head of household, or a qualifying widow or widower with a dependent child
- $25,000 if you are married but filing separately and did not live with your spouse at any time during the tax year
- $32,000 if you are married and filing jointly with your spouse
- $0 if you are married but filing separately and lived with your spouse at any time during the tax year
You will be taxed on any benefits you receive above those amounts. However, even if your benefits are not taxable, you are still required to file taxes.
For a free legal consultation, call 800-562-9830
What Portion of Your Disability Benefits from Social Security Will Be Taxed?
For most individuals, up to 50% of your benefits will be taxed. However, if the total of your earnings plus half of your benefits total more than $34,000 (or $44,000 for those who are married and filing jointly,) then up to 85% of your benefits may be taxed. This is also true if you are married and filing separately but you lived with your spouse at any time during the tax year.
What If I Repaid Benefits to a Private Insurance Carrier?
If you received private disability payments from an employer or insurance company and used your Social Security disability benefits to repay them, then you can take an itemized deduction if the repayment was under $3,000. For repayments over $3,000, you may be able to claim a tax credit instead.
Also, certain legal expenses, as well as any expenses incurred determining, collecting, or refunding any tax, are eligible for tax deductions. To find out more information about how your disability benefits from Social Security affect your taxes, contact your Social Security Disability Claims Lawyer or accountant.
Marc Whitehead & Associates represents disabled claimants in their Social Security Disability, Long Term Disability Insurance and Veterans Disability Claims. To learn more, please read our free Social Security Disability E-book, and visit our website at disabilitydenials.com.
Call or text 800-562-9830 or complete a Free Case Evaluation form
