The payment of income taxes is an expense most of us prefer not to have, so we work hard all year to have enough taken out of our check to avoid paying more in April. If you do not have enough withheld you will owe Uncle Sam on April 15th, which can put a dent in your budget. Since payment of income taxes is linked to making an income, what do you do if you do not earn a wage? What, for instance, are your rights and responsibilities come tax time if you are on disability?
Paying taxes on Social Security Disability Income (SSDI) or Supplemental Security Income (SSI) is only likely if you have another source of income. Here is a general breakdown of how your disability benefits might be taxed:
- Individuals with an income between $25,000 and $34,000 might be taxed at about half of their benefit amount.
- Married persons will pay taxes of about half their benefit amount if the combined income is more than $32,000.
However, if you make more than these amounts you will probably not pay half of your benefits in taxes, the rate would be the marginal tax rate and that is much lower than 50%. Keep in mind though, if you do have income that throws you into these tax brackets, chances are the amount of work you are doing is putting your disability benefits at risk. Most people receiving disability are unable to work, due to their disability, and thus do not make enough to be taxed. As for SSI, being taxed on these payments is unlikely. This is because SSI is tied to a financial need and if you have an income that provides enough to get by you probably do not qualify for SSI. We understand how tricky the tax laws are, and that you need to know how these laws square up with your disability benefits. For an individualized answer, call our office. No one likes a surprise at tax time, or any other time for that matter when it comes to their budget. We will go over your case with you so you have a good idea of what to expect, and can be sure your benefits are protected.
For detailed answers to your questions about social security benefits and taxes, call an experienced attorney for help. Contact us online today for more information. We can also be reached at 855-727-6353.