person filing out taxes

SSDI provides essential financial support for those unable to work due to a disability. Many recipients of SSDI are uncertain about whether their benefits are taxable and, if so, how much they might owe. Knowing whether your SSDI benefits are taxable, how to report them, and how to minimize your tax liability can help you make informed decisions. In this blog, we’ll break down everything you need to know about the impact of SSDI on your taxes, offering clarity and practical tips for managing your finances effectively.

Combined Income Calculation

The IRS determines the taxability of your SSDI benefits based on your “combined income,” which includes:

  • Adjusted Gross Income (AGI): Your total income minus specific deductions.
  • Non-taxable Interest: Interest income that is not subject to federal tax.
  • Half of Your SSDI Benefits: 50% of the total SSDI benefits you received during the 

Read More: Does Social Security Watch Your Bank Account?

Tax Thresholds

The IRS sets specific income thresholds to determine the taxability of SSDI benefits. These thresholds are based on your filing status:

  • Single Filers:
    • If your combined income is between $25,000 and $34,000, up to 50% of your SSDI benefits may be taxable.
    • If your combined income is more than $34,000, up to 85% of your SSDI benefits may be taxable.
  • Married Filing Jointly:
    • If your combined income is between $32,000 and $44,000, up to 50% of your SSDI benefits may be taxable.
    • If your combined income is more than $44,000, up to 85% of your SSDI benefits may be taxable.
  • Married Filing Separately:
    • If you file separately but lived with your spouse at any time during the year, up to 85% of your SSDI benefits may be taxable, regardless of your combined income.

State Taxes

In addition to federal taxes, a few states tax Social Security benefits.The amount of state tax you’ll pay depends on factors such as your adjusted gross income (AGI), tax-filing status and, in some cases, your age.

 As of 2024, these states tax SSDI benefits: Colorado, Connetectuit, Kansas, Minnesota, Montanna, New Mexico, Rhode Island, Utah, and Vermont. 

Keep in mind that tax laws can change. Consult your state tax authority for the most up-to-date information. 

Read More: Do SSDI Benefits Increase Every Year? 

Tax Tips for SSDI Recipients

Taxes in general can be complex and with adding the different rules with SSDI benefits, it can be difficult to manage. Here are some essential tax tips to help you:

1. Keep Accurate Records

woman looking at tax papers
  • Form SSA-1099: Make sure you keep the SSA-1099 form sent by the Social Security Administration, which details your total SSDI benefits received for the year.
  • Income Documentation: Keep accurate records of all other income sources, including wages, interest, dividends, and any other taxable income.
  • Medical Expenses: Save receipts and documentation for out-of-pocket medical expenses, which may be deductible if they exceed a certain percentage of your AGI.

2. Maximize Deductions and Credits

  • Medical Expense Deduction: If your medical expenses exceed 7.5% of your AGI, you may be able to deduct the excess amount.
  • Standard vs. Itemized Deductions: Choose between standard and itemized deductions based on which is more beneficial for your situation.
  • Earned Income Tax Credit (EITC): If you have earned income, you might qualify for the EITC, which can reduce the amount of tax you owe

3. Stay Informed

  • Tax Law Changes: Keep up-to-date with any changes in tax laws that might affect your SSDI benefits and overall tax situation.
  • IRS Publications: Refer to IRS publications and resources specifically aimed at SSDI recipients for the latest information and guidelines.

Maximize Your SSDI With Tabak Law

At Tabak Law, our experienced SSDI attorneys have a proven track record of securing the maximum benefits for our clients. We understand the intricacies of the SSDI system and can help you navigate the process with confidence. Don’t leave money on the table. Contact Tabak Law today for a free SSDI case consultation to discuss your SSDI claim and ensure you receive the benefits you deserve. Let us fight for your financial security.

Nothing posted on this website is intended, nor should be construed, as legal advice. Blog postings and site content are available for general education purposes only.

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