In About a Minute--a Social Security Disability FAQ: Are Social Security disability benefits taxable?

Most people who are earning Social Security disability benefits do not have enough income to pay any income taxes. If you are only receiving Supplemental Security Income—SSI—benefits, it is very unlikely that your benefits are taxable because that is a program for individuals with little or no income. When disability benefits are taxable, it is usually a Social Security Disability Insurance—SSDI—recipient.

Depending on your total income—including your spouse’s income if you are married filing jointly—you could be taxed at your marginal tax rate on 50 to 85 percent of your disability benefits.

If you are awarded a large lump-sum back payment of SSDI benefits you may have to payout a chunk of that money in taxes to Uncle Sam in the year you receive the back pay.  

 

Sean D. Cuddigan
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SSA and VA Disability Attorney in Omaha, Nebraska