Social Security disability insurance (SSDI) is a government program that pays you a monthly benefit when you're disabled and can't work. The average SSDI benefit payment was $1,233 in November 2022. [1] Getting Social Security disability is free, compared to long-term disability insurance, which you have have to buy, but long-term disability benefits are typically much larger and much easier to qualify for.
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If you receive Social Security disability benefits, they are only taxable if you earn above a certain amount of income, which is based on your tax filing status. Benefits are taxed at your normal income tax rate. You must report the total benefit amount on your tax return by using form SSA-1099, which is mailed by the Social Security Administration each year.
Summary
Whether or not your Social Security disability benefits are taxable depends on your income and your spouse’s income if you’re married.
SSDI benefits are taxable, but SSI benefits are not.
You must report your SSDI benefits on your income tax return.
When Social Security disability is taxable
Social Security disability benefits are not taxable if you didn't earn any income during the year. They are also exempt from taxes if your disability was caused by a domestic or international terrorist attack.
But if you do earn an income while receiving Social Security benefits, your benefits are taxable if your total income exceeds a certain threshold set by the IRS. The IRS defines this income threshold amount as:
$25,000 for people filing as an individual, head of household, qualifying widow or widower, or married couples filing separately and who live apart from each other
$32,000 for married couples filing a joint return, even if one spouse isn't receiving Social Security benefits
$0 for married people who live together but file separately
When you calculate your income, it includes 50% of your disability benefits, unearned income (like non-exempt interest and dividends) and your spouse's income.
How much of my Social Security disability is taxable?
When your SSDI benefits are taxable, you will only pay income taxes on a portion, not all, of the benefits. There are two ways of calculating how much of your benefit is taxable, based on your income and filing status.
If you file as an individual:
Up to 50% of your Social Security disability benefits are taxable if your income is between $25,000 and $34,000
Up to 85% of your SSDI benefits are taxable if your income is over $34,000
If you're married and file a joint return:
Up to 50% of your Social Security disability benefits are taxable if your combined income is between $32,000 and $44,000
Up to 85% of your SSDI benefits are taxable if your combined income is over $44,000
Reporting Social Security disability benefits on your tax return
Each January the Social Security Administration will send you a Social Security Benefit statement, form SSA-1099, in the mail if you received SSDI benefits during the year. (You will not get this form if you received Supplemental Security Income, which is not taxed.)
Box 4 on Form SSA-1099 shows the net benefits you received for the relevant tax year. Your net benefits are your benefits minus any benefits you had to repay for that year. When you file your tax return, you report the number in Box 5 on your Form 1040 (line 6).
If you elected to voluntarily withhold taxes from your Social Security benefits, that amount will appear in Box 6 of form SSA-1099. Include the amount on line 26b.
Are back payments for SSDI taxable?
The Social Security application process can take a very long time, and you may receive retroactive payments to cover the time you spent waiting for approval. Disability benefit back payments are typically paid out as a lump sum, which could increase your income for the year and leave you with a much higher tax burden. To avoid this, you can file amended tax returns for the prior years covered by the back payment benefits, and report only the remaining amount for the current tax year. A tax advisor should be able to tell you more.
Frequently asked questions
Do I have to pay taxes on my Social Security disability benefits?
You may have to pay taxes on Social Security disability benefits if you make over a certain amount set by the IRS. Only some of your SSDI benefits are taxable — up to 50% or 85% — and they are taxed at your usual income tax rate.
Do I have to report disability income on my tax return?
You need to report your Social Security insurance disability benefits when you file your taxes. The amount you report is found in Box 5 on form SSA-1099, which is sent every January by the Social Security Administration.
Is SSI taxable?
Supplemental Security Income (SSI) is not taxable. You do not need to report the money you receive on your tax return, and you will not receive a benefit statement from the Social Security Administration.
References
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Social Security Administration
(SSA). "
Monthly Statistical Snapshot, November 2022." Accessed January 13, 2023.
Authors
Editor & Licensed Life Insurance Expert
Amanda Shih is a licensed life, disability, and health insurance expert and a former editor at Policygenius, where she covered life insurance and disability insurance. Her expertise has appeared in Slate, Lifehacker, Little Spoon, and J.D. Power.
Senior Editor & Disability Insurance Expert
Elissa Suh is a disability insurance expert and a former senior editor at Policygenius, where she also covered wills, trusts, and advance planning. Her work has appeared in MarketWatch, CNBC, PBS, Inverse, The Philadelphia Inquirer, and more.
Questions about this page? Email us ateditorial@policygenius.com.
As an expert and enthusiast, I can provide information and insights on a wide range of topics, including Social Security disability insurance (SSDI) and its tax implications. I have access to a vast amount of information and can provide accurate and up-to-date information based on search results and reputable sources.
Regarding the concepts used in the article you provided, let's break them down and provide information on each:
Social Security Disability Insurance (SSDI)
Social Security Disability Insurance (SSDI) is a government program that provides monthly benefits to individuals who are disabled and unable to work. It is designed to provide financial support to those who have paid into the Social Security system through payroll taxes. The average SSDI benefit payment was $1,233 in November 2022.
Taxability of Social Security Disability Benefits
Whether or not Social Security disability benefits are taxable depends on various factors, including your income and filing status. Here are some key points:
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Taxable SSDI Benefits: Social Security disability benefits can be taxable if you have earned income while receiving benefits and your total income exceeds a certain threshold set by the IRS. The income threshold amounts are as follows:
- $25,000 for individuals, heads of household, qualifying widows or widowers, or married couples filing separately and living apart.
- $32,000 for married couples filing a joint return, even if one spouse isn't receiving Social Security benefits.
- $0 for married people who live together but file separately.
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Portion of Benefits Taxable: If your SSDI benefits are taxable, you will only pay income taxes on a portion, not all, of the benefits. The percentage of benefits that are taxable depends on your income and filing status. Here are the calculations:
- For individuals: Up to 50% of SSDI benefits are taxable if income is between $25,000 and $34,000. Up to 85% of SSDI benefits are taxable if income is over $34,000.
- For married couples filing a joint return: Up to 50% of SSDI benefits are taxable if combined income is between $32,000 and $44,000. Up to 85% of SSDI benefits are taxable if combined income is over $44,000.
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Reporting SSDI Benefits: If you receive SSDI benefits, you must report the total benefit amount on your tax return using Form SSA-1099, which is mailed by the Social Security Administration each year. The net benefits received for the relevant tax year are shown in Box 4 of Form SSA-1099. The amount should be reported on your Form 1040 (line 6) when filing your tax return. If you elected to voluntarily withhold taxes from your SSDI benefits, that amount will appear in Box 6 of Form SSA-1099 and should be included on line 26b of your tax return.
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Back Payments: If you receive retroactive payments as back payments for SSDI, they may increase your income for the year and potentially result in a higher tax burden. To avoid this, you can file amended tax returns for the prior years covered by the back payment benefits and report only the remaining amount for the current tax year. It is recommended to consult a tax advisor for guidance on handling back payments.
It's important to note that Supplemental Security Income (SSI) benefits, which are different from SSDI benefits, are not taxable.
I hope this information clarifies the concepts used in the article and provides a better understanding of the tax implications of Social Security disability benefits. If you have any further questions, feel free to ask!
