Do I Have to Pay Taxes on My Social Security Disability Benefits?
The government provides Social Security disability benefits to disabled workers who qualify. If you receive Social Security disability, that income may be exempt from taxation if you have no other income or if your other income is low.
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Social Security Disability Benefits
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Social Security disability benefits are benefits the federal government pays to individuals who are disabled from working. The money comes from the Social Security taxes that everyone who works has deducted from their wages.
How to Qualify for Social Security Disability
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To qualify for Social Security disability benefits, you must have worked in Social Security-covered jobs and have had Social Security deductions from your paycheck. Then you must have a physical or mental disability that prevents you from doing the work you normally do. You must show that your disability will last for more than one year, and the Social Security Administration must decide that your disability prevents you from doing any other type of work.
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Social Security Disability Benefits are Sometimes Taxable Income
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The Internal Revenue Service does not require you to file a tax return if Social Security disability was your only source of income for that tax year. If you had other income in addition to the disability benefits, your income is only taxable if your adjusted gross income is higher than the base for your filing status. For 2010, the base amounts are $32,000 for married couples filing jointly; $25,000 for singles, heads of household, qualifying widows or widowers with dependent children or married individuals filing separately who did not live with their spouses for any part of the tax year; or $0 for married individuals filing separately who did live with their spouses for any part of the year.
Computation to Determine if Your Benefits are Taxable
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To quickly figure out if your Social Security disability benefits are taxable, find out the total of the benefits you earned for the tax year and divide that number by two. Then add that one-half figure to your other gross income. If that total figure is less than the base amount for your filing status, you probably will not have to pay taxes on your benefits. If that figure is more, the benefits are taxable income. For example, if you earned $15,000 in Social Security disability benefits in 2010 and $30,000 at work before any deductions, you would add $7,500, which is half of your benefits, and $30,000 for a total of $37,500. This number is higher than the base amounts for married individuals filing jointly or separately and for individuals or qualifying widows or widowers with dependent children. The income would be taxable. However, if you earned $15,000 in benefits but only earned $10,000 from work, the total is $17,500, which is lower than the base amounts for individuals or married couples filing separately. Unless you are married filing individually and you lived with your spouse during the year, the benefit is not taxable income in that instance.
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