Are Social Security Disability Benefits Taxable in Waco?

If you’re worried about losing some of your Social Security Disability (SSD) benefits to taxes, that’s only natural.

You’re already struggling with health problems. You can’t work. You’ve lost your income.

Disability benefits give you some relief. But when it comes to money, you’re still going through one of the hardest times of your life.

Here’s some good news: Most people don’t have to worry about income taxes cutting into their benefits.

Only about one-third of people who receive disability benefits pay income taxes on those amounts, according to the Social Security Administration (SSA).

A large majority of people – two-thirds – don’t pay income taxes on disability benefits.

Attorney Merryl Jones encourages you to talk to a tax professional about your particular tax consequences of receiving disability benefits.

But if you want to understand more about when disability benefits are taxable, get started by seeing the information we’ve gathered from the government below.

And if you still need to apply for Social Security Disability benefits, we’ll evaluate your case for free.

When You Have to Pay Taxes on Disability Benefits.

If your Social Security Disability benefits plus any other income add up to certain amounts, then you have to pay federal income taxes on your benefits. Here are the income levels that trigger taxes:

  • Total annual income if you’re filing taxes as an individual: $25,000 or more.
  • Total annual income if you’re filing jointly with your spouse: $32,000 or more.
  • Total annual income if you’re married, filing separately and living apart: $25,000 or more.
  • Total annual income if you’re married, filing separately and living together: Any income.

When you’re coming up with these totals, you don’t have to include all of your SSD benefits.

The Internal Revenue Service (IRS) says you only have to count half your disability benefits, along with any other income.

When you’re married filing jointly, you have to include your income and benefits along with your spouse’s income.

To learn more about applying for SSD benefits or appealing a denial, contact us today.

When You Do Pay Taxes on Benefits, How Much?

When your income is high enough to trigger income taxes on your disability benefits, the amount of benefits you have to claim is set on a scale.

  • Monthly income of $2,083 or less when you’re filing as an individual: You pay no taxes on disability benefits.
  • Monthly income of $2,084 to $2,833 as an individual: You declare 50 percent of your disability benefits.
  • Monthly income of $2,834 or more as an individual: You declare 85 percent of your benefits for taxes.
  • Monthly income of $2,666 for a married couple: You pay no income taxes.
  • Monthly income between $2,667 and $3,666 as a married couple: You declare 50 percent of your disability benefits.
  • Monthly income of $3,667 or more as a married couple: You declare 85 percent of your disability benefits for taxes.

Just because you declare 50 percent to 85 percent of your disability benefits for income tax purposes, it doesn’t mean that’s the portion of your benefits you have to hand over to the government.

Instead, those are the amounts you add to your income total when calculating your taxes.

Then you’re taxed at the same rate as any other income. If you’re in the higher earning group, you could pay 35 percent of your total income in taxes. Most of the time, you’ll pay 10 to15 percent.

What about Texas state taxes and Social Security Disability?

Most states exempt Social Security Disability benefits from their state income taxes. A handful of states charge income taxes on disability benefits.

But Texas is in a group of states that don’t charge any state income tax at all. So you don’t have to worry about paying state income taxes on Social Security Disability benefits when you live in Texas.

Contact us with any questions you have about Social Security Disability benefits and taxes.

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