Social Security Disabilty Tax Information

Social Security disability payments are taxable and should be included on your income tax returns, but most people who receive disability benefits pay little or no taxes.

Significance

Social Security disability payments are made to individuals who become disabled before reaching retirement age.

Taxation

To determine the amount of your disability benefits that are taxable, use Worksheet A found in IRS Publication 915. You may have to pay taxes if you earn additional income such as from wages, a pension, or dividends. Generally, recipients of disability benefits who file single and earn less than $25,000 will not owe taxes on their benefits. For married joint filers, the threshold is $35,000.

Withholding

If you have income in addition to your disability benefits, it may be necessary to complete Social Security Form W-4V to request that taxes be withheld from your disability payments. Withholding can be in the amount of 7%, 10%, 15%, or 25%.

Filing

Taxpayers who receive Social Security disability benefits will receive a 1099-SSA in the mail which indicates the amount of benefits received. They should use the 1099-SSA to file their tax returns.

Warning

Social Security disability benefits are distinctly different from Social Security supplement income (SSI) benefits. SSI benefits are not taxable.

References

• Internal Revenue Service: Publication 915
• Social Security Administration: Disability Benefits

Resources

• Social Security Administration: Form W-4V