Disability Benefits: Do I Need to File My Taxes?

filing disability benefits
Dealing with the various taxing regulations can be challenging under any circumstance but even more so when receiving disability benefits. Even the best answer to the question of “Do I need to file my taxes?” is a resounding “maybe!” For those who are getting disability benefits, the question becomes even more convoluted as regulations in both taxation and with the actual benefits changing from year to year. 

Do I Have To File?

As a general rule, it is a good idea to file a tax return to determine if there are any tax credits or subsidies that you might qualify for. However, filing is mandatory if your individual income as a single person meets or exceeds $25,000 dollars. This changes to $35,000 dollars if you are married and filing jointly, regardless of the benefit status of your spouse.

How Disability Is Taxed

Disability benefits are taxed differently than other income sources. For an individual who makes less than $34,000 dollars but more than $25,000 dollars, the benefits are taxed on fifty percent of the income total. This means that the tax calculation or that which is owed is only tabulated on fifty percent of the benefits. If the benefit income exceeds the $34,000, the tabulation can go as high as eighty-five percent. However, this is on a graduated scale. For those who are filing jointly, the combined income amounts change to $32,000 with the cap for fifty percent being $44,000. If the combined income exceeds the cap, then you can be taxed up to eighty-five percent. However, the tax is not calculated on more than eighty-five percent regardless of filing status.

Tax Withholding For Benefits

The Social Security Administration does not automatically withhold taxes from your disability benefits. For others, who might have company supplied benefits, it is up to each individual company as to withhold or not. However, you can request that the SSA being withholding some of your benefits for tax purposes To do so, you must contact your local office to request tax withholding.

While doing your taxes can be a frustrating endeavor, there is a generous amount of information and assistance available. For those receiving disability benefits, working with someone who can potentially help you navigate the perils and pitfalls of your taxes can go a long way to helping reduce your stress and frustration while potentially allowing you to gain access to tax credits or subsidies.

 

Social Security Disability Attorney Kenneth G. Marks Law Firm
24422 Avenida de la Carlota, Suite 310
Laguna Hills, CA 92653
Phone: 949.748.6470, Fax: 949.748.6474