With tax season right around the corner, a very common question asked is whether an individual has to file taxes when receiving Social Security Disability benefits and if they have to pay taxes on those benefits they receive. It is important to note that Supplemental Security Income (SSI) benefits are not taxed. But, Social Security Disability Insurance (SSDI) benefits are subject to taxes.
While Social Security Disability Insurance benefits can be subject to tax, it depends on how much total income you have. Essentially, whether you have to file taxes when receiving Social Security Disability benefits depends on how much income you receive and whether or not your spouse receives an income.
The general rule
As a general rule, you will have to pay federal taxes on Social Security Disability benefits if you file a federal tax return as an individual and your total income is more than $25,000. If you file a joint return, you will have to pay federal taxes if you and your spouse have a total combined income that exceeds $32,000.
It is important to note that if you fall within one of those tax brackets above, you will not have to pay taxes on all of your Social Security Disability benefits. Instead, only a portion of benefits will be taxed. For example:
- If you file a return as a an individual and earn $25,000-$34,000 a year, you may be responsible paying income tax on 50 percent of the amount you received from Social Security.
- If your income is more than $34,000, then you may have to pay taxes up to 85 percent of your benefits.
- If you file jointly with a spouse, you may have to pay taxes on 50 percent of your benefits if your combined income is $32,000-$44,000.
- If your combined income is more than $44,000, then up to 85 percent of your benefits received may be taxed.
Overall, ff Social Security Disability benefits are your only source of income and you are single, you do not necessarily have to file taxes. However, it may be in your best interest to file. For example, if you did not file taxes, you were unable to receive stimulus payment available.