Tucson Social Security Disability Blog

Are My Disability Benefits Taxable?

Posted by John Kuhnlein | May 18, 2017 | 0 Comments

Many clients ask me after they get their Social Security disability benefits if they will have to pay income taxes on that money. In general, the answer is yes. But the amount a client may owe is usually going to be very small, if anything.

Calculator 988017 640
According To This Chart. . .

Warning:  Math Ahead

The IRS considers disability payments to be income. For that reason, there is no blanket exemption from federal taxation.  As with other taxes, though, the IRS uses a formula to determine how much the tax will be.  The key inquiry is how much other income the client has.  The specific numbers are as follows (thanks to Beth Laurence of Nolo.com for this chart):

Individuals

Amount of Monthly Income

Portion of SSDI to Be Taxed

0-$2,083

0%

$2,084 - $2,833

50%

$2,834 and up

85%

Married Couples

Amount of Monthly Income

Portion of SSDI to Be Taxed

0-$2,666

0%

$2,667 - $3,666

50%

$3,667 and up

85%

The Devil Is In The Details

If the IRS does consider a portion of your Social Security disability benefits taxable, that amount gets added to the rest of your income. That amount is taxed at whatever bracket your overall income places you in.  In other words, even if you had the highest-amount of income on the above chart, you won't pay 85% of your Social Security disability benefits in taxes.  The current highest tax bracket is just under 40%.  You would need to have  more than $418,000 in income to get there.  If you have that much income, your monthly Social Security disability check is probably not going to change your financial picture much.

Check If Your State Is Among The Dirty Dozen

Most states do not tax Social Security disability benefits at all. For those 12 states that do, most will  follow the same rules as the IRS in determining tax liability for Social Security benefits.   

States That Tax Disability Benefits (thanks again to Beth Laurence and Nolo.com)

Connecticut

Nebraska

Colorado

North Dakota

Iowa

Rhode Island

Kansas

Utah

Montana

Vermont

Minnesota

West Virginia

H & R Block Is On Almost Every Corner--So No Excuses

Taxes 1015399 640
Beats The Other Thing You Can't Avoid

As with anything related to calculating and paying taxes, this gets complicated fast. I usually advise people who are getting Social Security disability benefits to consult a tax preparer.  Even if you usually prepare your own returns, getting Social Security disability benefits is a solid reason to get professional help.  If a tax preparer says you make too little for your benefits to be taxed, you can likely return to filling out your own returns in the future.

I know very little about taxes. This information is intended only to provide very general advice.  If you have any doubts at all about your taxes, please contact the proper professional.

About the Author

John Kuhnlein

Since 1992, I have been helping the people of Southern Arizona get the benefits they are due. Before devoting all my efforts to assisting people with Social Security disability claims, I also handled such complex lawsuits as medical malpractice and products liability. I brought to my Social Security cases all the skills and attention to detail that I developed in the courtroom. I approach each Social Security disability case as if it were a million-dollar lawsuit. For the people trying to get Social Security benefits, their claim is every bit as important. Because I have personally handled so many Social Security cases, I have refined the skills I need to win your case for you. I have helped people win cases for every kind of ailment from arthritis to valley fever. At present, I am focused on helping those persons with neurological and orthopedic disorders. Because claims for people over age fifty bring additional complications, I particularly seek out those cases to work on. I regularly write about back and spine conditions on my blog. I actively seek out the latest information about orthopedic and neurological disorders to ensure I can represent my clients as effectively as possible. Because of my current focus, I regret that I am not able to take any cases for mental disorders. If you are over age fifty and suffer from any orthopedic or neurological disorder, please contact me at once.

Comments

There are no comments for this post. Be the first and Add your Comment below.

Leave a Comment

About Our Firm

Kuhnlein portrait footer

John Kuhnlein has been assisting people with Social Security disability claims for the past 20 years.

Free Consultation

Feel free to call with any questions or concerns you have about Social Security disability. I never charge for a consultation. In fact, there is no charge at all until we win your case. Unlike most lawyers, I never charge extra for things like telephone calls or making copies.