How Are Benefits Figured With Social Security Disability?
The Social Security Administration (SSA) takes several factors into consideration when determining how much to pay in disability benefits. Generally, payment amounts are based on the applicant's earnings histories. Other factors affecting benefit amounts include taxation, the applicant's other sources of incomes and their amounts. Also, the SSA pays benefits to family members as well --- payment amounts are affected by the size of the households.
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How Benefits are Determined
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Disability benefits paid by Social Security are based on earning records of the applicant over his working years. The SSA adds adjustments to represent the increases in costs of living to its calculations before coming up with its final benefit amounts. Each year eligible workers receive Social Security statements outlining their disability benefits information and how much they will receive at that time.
Benefit Amounts for Family Members
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Other individuals are eligible to receive Social Security benefits based on the applicant's earnings records. Benefits can be paid to the applicant's spouses and children. In fact, disability benefits can be paid to divorced spouses. The amounts received are up to 50 percent of the disabled person's benefit payments. However, benefit payments to other family members generally cannot exceed 80 percent (as of February 2011); if payment amounts are to exceed this threshold, the sizes of their checks will be reduced proportionately.
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How Taxation Affects Benefit Payments
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Applicant's disability benefits are reduced by taxes taken out by the Internal Revenue Service (IRS) if his household income exceeds SSA guidelines. As of February 2011, the IRS taxes 50 percent of Social Security disability benefits received by individuals at normal tax rates if their total incomes top $25,000 and up to 85 percent if they make over $34,000. For married couples, up to half of their disability benefits are taxed if they have over $32,000 in earnings and up to 85 percent if their incomes exceed $44,000.
Other Sources of Income Affecting Benefit Amounts
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Social Security disability benefits are reduced if individuals are receiving payments from public sources of disability incomes such as temporary disability insurance plans sponsored by several states and also workers' compensation insurance. If the benefits from these public sources of income combined with SSA benefits exceed more than 80 percent of the individual's pre-disability salaries, then his Social Security payments will be reduced.
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