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If you’re getting Social Security Disability Insurance (SSDI) or applying for benefits, you may be asking: are SSDI benefits taxable? They can be. This article explains when SSDI is taxable, how the IRS combined-income test works, what income limits apply, what forms you may receive, and how back pay can affect your taxes.
Read on to understand taxes on your disability benefits.
Yes, SSDI benefits can be taxable at the federal level. But you may not owe federal income tax on SSDI benefits, especially if SSDI is your only income. You’re more likely to owe taxes on SSDI when you have other income or when you file jointly because your spouse’s income counts too. This article only covers rules for federal taxes.
The IRS uses a combined income test to decide if any of your Social Security benefits are taxable. This is the fastest way to check your tax obligation for the year.
Combined income is not just your SSDI check if you file jointly. The IRS looks at your income and your spouse’s income together.
Combined income includes:
Example: If you received $18,000 in SSDI for the year, the IRS counts $9,000 of that amount toward your combined-income and then adds your other income.
Once you know your combined income, sometimes called provisional income, compare it to the IRS thresholds for your filing status. The rules follow this basic structure:
For these filing statuses, the lower threshold is $25,000 and the upper threshold is $34,000.
That means:
For married couples filing jointly, the lower threshold is $32,000, and the upper threshold is $44,000. Often, one spouse is still working.
That means:
If you are married, filing separately, and you lived with your spouse at any time during the year, you may have higher taxes on your benefits according to IRS Publication 915.
Thresholds at a Glance
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Get EvaluationSSDI may be taxable. Supplemental Security Income (SSI) is not.
If you’re not sure which benefit you receive, check the wording on a Social Security letter or your Social Security benefit statement. SSI is labeled as Supplemental Security Income, while SSDI is described as disability insurance benefits.
These examples use round numbers to keep the focus on the rule.
You receive $20,000 a year in SSDI and have no other income. Half of your benefits is $10,000 for the combined income test, which is below the $25,000 threshold for a single filer. That means no federal income tax on your SSDI benefits.
You file jointly. You receive $18,000 in SSDI and your spouse earns $40,000 in wages.
Half of your SSDI is $9,000. Add the wages and your combined income is about $49,000, before any tax-exempt interest. That puts you above the $44,000 threshold, so up to 85% of your benefits are included in taxable income.
You file single and receive $22,000 in SSDI. You also earn $11,000 from part-time work and receive $1,500 from a pension.
Half of your SSDI is $11,000. Add the work income and pension to this and your combined income is $23,500. That is still below the $25,000 threshold, so you owe no federal tax on SSDI.
The main tax form for SSDI is Form SSA-1099, also called the Social Security benefit statement. It shows the benefits you got for the year and can help you check if you owe taxes.
You can download your SSA-1099 from your online Social Security account. The most recent tax year’s form is available starting Feb. 1 each year. You should also receive a copy by mail (if you don’t, notify the SSA).
If you are near the IRS thresholds or received back pay, look at your SSA-1099 with your W-2s or 1099s for your other income.
Back pay can make one year’s income much higher than usual, especially when you receive lump-sum Social Security payments. That’s because more than one year of benefits may be paid in a single year. This can push your combined income over the IRS thresholds and make more of your SSDI taxable. But you don’t have to treat all of that back pay as income for that year.
The IRS allows you to spread lump-sum Social Security payments across the years they were meant for, which lowers the amount of benefits that are taxable for each year.
To do that:
Tax software or a tax professional can help you calculate taxes on back pay covering multiple years.
You can request federal tax withholding from your SSDI payments to reduce the chance of owing later. You can request that 7%, 10%, 12%, or 22% be withheld with IRS Form W-4V.
For official guidance, read:
This page provides an overview about federal taxes on SSDI benefits. It is general information, not tax advice. State tax rules vary and are not covered here. Advocate helps with SSDI claims and appeals. We don’t prepare tax returns, provide tax filing services, or give tax advice.
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Get EvaluationOften, no. If your only income is SSDI and it’s below the IRS threshold, your benefits aren’t taxed.
Yes. If you file jointly, the combined-income test uses your income and your spouse’s income together. That can push you over the minimum threshold.
No. SSI is not taxable under federal rules.
Not always. Whether you have to file depends on your total income, filing status, age, and whether you have other reasons to file, such as self-employment income or taxes withheld. You may need to file even if your SSDI is not taxable.
You can download a replacement through your online Social Security account. Replacement forms for the most recent tax year are available beginning Feb. 1. You can also contact the SSA if you didn’t get the form in the mail and don’t have an online account.
It can. A lump-sum back payment makes your income look higher the year you receive it. But the IRS lets you calculate the taxable part based on the years the back pay was for, not just the year you received it.
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