Do Disabled People on Social Security Benefits Pay Taxes?
Generally, the law requires all U.S. residents with any significant income to file an individual tax return. The law provides no specific exemption to those collecting Social Security retirement benefits, SSI payments or who are disabled. If your only source of income is from SSI or Social Security, however, it is unlikely you will have a federal income tax liability. This is a result of your income level, though, not of being disabled or on Social Security.
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Who Must File -- Income Levels
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For the most part, you must file an income tax return if you are single, under 65 and your gross income from all taxable sources is at least $9,350. If you are over 65, you must file if your gross income is at least $10,750. Gross income includes everything from wages, rents, royalties, pension income and withdrawals from IRAs and 401ks. Nontaxable sources of income do not count, including Roth IRA withdrawals and certain benefits from disability insurance policies. If you are married and file jointly, you must file if you are both under 65 and your income is over $18,700. If one of you is over 65 you must file if your income is over $19,800; and if both of you are over 65, you must file if your joint income is over $20,900. If you are married and file separately, you must file if your income is at least $3,650. Your income tax return will tell you if you have to pay income taxes for the year.
Heads of Households and Qualifying Widow(er)s
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You must file an income tax return if you are a head of household, you are under age 65 and your annual income is $12,050 or more. If you are over 65 and a head of household, then you must file if your income is $13,450 or more. If you are a qualifying widow or widower with a dependent child, you must file if your income is over $16,150 if you are age 65 or older, or if your income is $15,050 or more and you are under age 65. Again, your return will determine your tax liability, not your disabled status.
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Dependents
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If you can be claimed on someone else's tax return as a dependent, the government restricts your ability to earn income without filing a tax return. Unless you are blind or over age 65, you must file a return if your unearned income is greater than $950, your earned income is greater than $5,700 or your gross income is more than the larger of $950 or the sum of $300 plus your earned income for the year. If you are not blind and you are under age 65, you must file if your unearned income is over $2,350, your earned income was more than $7,100 or your gross income is greater than the larger of $2,350 or the sum of $1,700 plus your earned income for the year. If you are both blind and over 65, higher limits apply.
Other Situations
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Additionally, you must file an income tax return if you owe alternative minimum tax, you have over $400 in self-employment income or you earn over $108.28 from a church or other organization where your employer does not have to file Social Security and Medicare taxes.
Credit for the Elderly or Disabled
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You may be able to qualify for the tax credit for the elderly or disabled. You can calculate the amount of any credit by filling out Schedule R and submitting it with your Form 1040 or Form 1040A. This credit will reduce your tax bill dollar for dollar by the amount of the credit. You may have to get a physician to help you document your disability. The tax credit could be as much as $7,500.
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