Disabled Taxpayer Obligations

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Understanding your federal tax obligations as a disabled person may be difficult, but it certainly isn't impossible. Learn about disabled taxpayer obligations with help from a top insurance attorney in this free video clip.

Part of the Video Series: Disability Insurance & More
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Video Transcript

I'm Frank Darras, America's top insurance attorney. Today, we're going to talk about the disabled and tax payer obligations. Federal taxes are a debt, you typically can't get out of, even if you become disabled. For those of you who are receiving or trying to secure Social Security Disability Insurance, SSDI benefits. Understanding your federal tax obligations maybe difficult. With the largest disability practice in America, I have clients who often ask, Frank, do I still need to file a tax return, even if I'm disabled? Yes, you do. According to the IRS, you must file a tax return, if your total income is above the minimum taxable brackets. Frank, are my SSDI monthly payments taxable? Yes. When figuring out what's taxable, SSDI payments are treated like regular Social Security payments. And reported to you on Form SSA 1099. In general, up to 50 percent of your benefits maybe taxable each year, plus all your other income. While it's not common, up to 85 percent of your monthly benefits can be taxable. If the total of half your benefits and all your other income is over 34,000. Or, if you're filing single, or if you made 44,000 and you're married and filing jointly, or you're married and filing separately. And lived with your spouse at any time during the tax year. That was a mouthful, it often requires tax help, get some, it's important. Frank, how was my retroactive SSDI award taxed? Well, for purposes of taxes, you account for the retroactive award in the tax year you get it. However, if you can, don't treat all of the retroactive award as income in the tax year received. If you do, you're making a financial mistake that may result in paying a large amount of unnecessary taxes. Get the message, you need some tax help. To prevent that from happening, look at box three of From SSA-1099. It'll breakdown the taxable part of the benefits to show the year or years to which they apply. Some clients ask, are there any tax benefits for the disabled receiving SSDI or SSA benefits? Absolutely, you can receive deductions for additional costs incurred by your disability. Including modifications to your home and car, or your work space to accommodate your disability. Some clients ask, where can I get help, Frank, filing my taxes? It's a good idea to invest in a tax prep software or to have your taxes prepared professionally. To ensure you're filing your SSDI benefits right and getting all the tax breaks and deductions you're entitled to. There's also some free tax resources. If you go to the IRS Free File, you can find some help, or the Volunteer Income Tax Assistance Program. There's also Low Income Taxpayer Clinics and AARP offers a tax paying program along with the state tax return preparation assistance. Even if you don't have to file a tax return, you still may want to, for several reasons. If you or your spouse have any income taxes withheld by an employer during the year, you definitely want to file. If you don't file, you won't get that tax refund. You can also take full advantage of any tax breaks or credits available to low or moderate income tax payers. And there's some credit, like the Earned Income Tax Credit that are refundable. If you qualify, your taxes could be reduced to the point that you get a refund, instead of owing any taxes. I hope that helps. I'm Frank Darras, founding partner of Darras Law in Ontario, California.


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