Income Tax on Social Security Disability

by Ronald Kimmons

The Social Security Administration has several programs that are funded by income tax and Social Security tax that help American citizens with basic needs. Some of these programs give benefits in the form of monthly income. The IRS is authorized to collect some of these benefits as income tax, depending on the total income you have.

Social Security Disability

The Social Security Disability program is a federal program run by the Social Security Administration. American citizens with disabilities can receive benefits from the SSD program to help them pay for basic needs. Employers are required to withhold Social Security tax from their employees' paychecks, which helps to fund the SSD program and pay for its benefits. This tax corresponds to 6.2 percent of each employee's pay stub, and employers are also required to add another 6.2 percent.

Eligibility and Benefits

To be eligible to receive SSD benefits, you must prove that you have a full-term disability that makes you unable to work. This disability must either last at least a full year or cause death. Since this program is funded on Social Security tax, you are also required to work for specific amounts of time according to your age to be able to qualify for benefits. How much you receive depends on your previous income. If you qualify for benefits, you can apply with the Social Security office closest to you, and you will receive monthly payments that count as part of your income. Benefits are paid on the first of each month, starting on the sixth month of your disability and lasting for as long as your disability lasts.

Income Tax on Benefits

Since SSD benefits are considered a type of income, the IRS might require you to pay income tax on them. Whether or not you must do so depends on how much your total income is. To determine this, you must look to all types of income you have. If you do not work, you must look at any other benefits you receive, insurance payments, pension and retirement or any other income that helps you to survive. If your monthly income exceeds $25,000, you must include your SSD benefits when you calculate how much income tax you must pay. If you are married, you must pay income tax on your benefits if your earnings exceed $32,000 per year.

Taxable Percentage

If you are required to pay income tax on your benefits, the IRS cannot levy tax on more than 85 percent of those benefits. If you file your tax return as a single individual and your total income is between $25,000 and $34,000, your income tax is calculated on 50 percent of your benefits. If your income exceeds $34,000, 85 percent of your benefits are taxable. If you file your tax return as a married individual, 50 percent of your benefits are taxable if your income is between $32,000 and $44,000. If your income exceeds $44,000, 85 percent of your benefits are taxable.

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