Is Social Security Disability Taxable?

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.

Social Security 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.

Is Social Security Disability Income Taxable?

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

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

Attorney Merryl Jones encourages you to talk to a tax professional about your particular tax ramifications of receiving Social Security disability benefits. 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. 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 Social Security Disability Benefits.

If the total of your Social Security Disability benefits plus any other income add up to certain amounts, then you will have to pay federal income taxes on your benefits. The exact amounts that trigger income tax change each year, so you should consult with your income tax professional about the details of your particular case.

When you’re calculating your income and benefits for tax purposes, you don’t have to include all of your SSD benefits. Tax laws change from year to year, but Internal Revenue Service (IRS) generally says you only have to count a portion of your Social Security disability benefits, along with any other income. Though, when you’re married filing jointly, you may 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 Social Security Disability Benefits, How Much?

When your income is high enough to trigger income taxes on your Social Security disability benefits, the amount of benefits you have to claim is set on a scale.  These amounts are adjusted for inflation annually, and can also be impacted by federal legislation, so check with your tax professional about exact amounts that pertain to your situation.

Even though you may have to declare 50 percent to 85 percent of your Social Security 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. You are then 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.  Again, these percentages are based on tax brackets which are adjusted by the IRS annually.

What about Texas state taxes and Social Security Disability?

Most states exempt Social Security Disability benefits from their state income taxes, but there are a handful of states that do collect income taxes on Social Security disability benefits.  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.