Filing Taxes On Social Security & SSI Disability Benefits

Overview

Supplemental Security Income (SSI) benefits are not taxed. Social Security Disability Insurance (SSDI) benefits are taxed by 13 states and may be taxed federally depending on household income.

Supplemental Security Income (SSI)

State and Federal Tax. SSI benefits are not taxable. Taxes will not be withheld from your benefit checks. You will not need to file taxes for your SSI benefits.

Social Security Disability Insurance (SSDI)

State Tax. Thirteen states tax SSDI benefits: Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia.

Federal Tax. Your SSDI benefits may be subject to federal tax. Whether you owe federal taxes is primarily based on your total household income – Social Security disability benefits, other Social Security benefits (if any), spouse’s earnings (if any and you are filing jointly) unemployment benefits (if any), interest (if any), dividends (if any), etc. The higher your household income, the more likely your SSDI benefits will taxed.

Your federal tax liability is as follows:

• No tax liability if your adjusted gross income is less than $25,000 as an individual or $32,000 if married and filing jointly.
• If your annual adjusted gross income is between $25,000-$34,000 as an individual or $32,000-$44,000 if married and filing jointly, fifty percent of SSDI benefits are taxed. Your actual tax rate will depend on your income amount. For example, 50% of your SSDI benefits may be taxed at 10%, 15%, or 20%, etc.
• If your annual adjusted gross income exceeds $34,000 for an individual or $44,000 if married and filing jointly, 85% of SSDI benefits are taxable. Again, your actual tax rate will depend on your income amount. For example, 85% of your SSDI benefits may be taxed at 10%, 15%, or 20%, etc.

Follow these steps to determine if you owe federal tax:

1. If you received SSDI benefits, you will have received from the federal government a Form SSA-1099.
2. You may file your taxes using Form 1040, enter your Social Security benefit amount on line 20a.
3. Use the Social Security Benefits Worksheet in the form instructions to determine your taxable Social Security benefit amount, and enter that amount on line 20b.
4. Complete the rest of your taxes.

Withholding. Social Security will not withhold taxes unless you ask it to do so. If you do request withholding, you can choose to have 7, 10, 12, or 22 percent withheld.