Basic Information About Tax Refunds and SSDI
Taxes are an inevitable part of life. On its own, understanding taxes is complicated enough, but when Social Security Disability Insurance (SSDI) benefits are thrown into the mix, the topic can become even more perplexing. The following is some basic information that will help you understand how your tax refunds may affect your SSDI benefits.
Are SSDI Benefits Taxable?
For recipients of Title II benefits, including SSDI, the taxability of benefits is dependent on the total amount of income that is received in a given year. The situations in which someone receiving SSDI benefits would be required to pay taxes include the following:
- If you file as an individual and earn more than $25,000 annually.
- If you file a joint return and your joint income exceeds $32,000 annually.
- If you are married and file a separate return, you will most likely be taxed on your benefits regardless of the benefit amount.
Do Tax Refunds Need to Be Reported to the SSA?
- The receipt of a tax refund does not need to be reported to the SSA, regardless of the type of benefit that you are receiving. The SSA looks at gross income when determining benefit amounts. Neither state nor federal tax returns are considered as sources of income.
- Do Earned Income Tax Credits (EITC) need to be reported to the SSA?
- The EITC does not count as income by the SSA. Therefore, it does not need to be reported.
- Can the IRS take any part of a disability check if back taxes are owed?
- The IRS is allowed to take money that is given to SSDI recipients. They may not take the entire amount of the monthly benefit, but they are entitled to take a portion of each monthly payment to recoup the money they are owed.
Can Taxes Be Withheld from SSDI Payments?
Yes, but it must be requested by the beneficiary or the beneficiary’s representative payee. Some forms must be filled out to complete the request and there are a limited number of specific rates that are allowable.
Are there specific deductions that people with disabilities can claim?
The IRS allows many different deductions for people with disabilities. However, many of these deductions come with complicated rules that must be followed to maintain eligibility.
The rules governing taxes and SSDI benefits can be complicated and are often misunderstood. If you have further questions regarding your SSDI benefits and how they affect your taxes, contact a Charlotte SSDI lawyer who can help you sort out all the details.
