It is tax time and I have been getting quite a few questions regarding past clients and their responsibility to pay taxes on their social security benefit checks.
Well, the rule is clear. You will have to pay federal taxes on your Social Security benefits if you file a federal tax return as an individual and your total income is more than $25,000. If you file a joint return, you will have to pay taxes if you and your spouse have a total income of more than $32,000. (see SSA.GOV)
What does this mean for the ordinary person receiving SSI / SSDI benefits? Well it all depends on whether you have other substantial income. This is what the Social Security Administrations has to say about taxes and SSD Benefits:
Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits.
No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules. If you:
- file a federal tax return as an “individual” and yourcombined income* is
- between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
- more than $34,000, up to 85 percent of your benefits may be taxable.
- file a joint return, and you and your spouse have acombined income* that is
- between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
- more than $44,000, up to 85 percent of your benefits may be taxable.
- are married and file a separate tax return, you probably will pay taxes on your benefits.
If you do have to pay taxes on your Social Security benefits, you can make quarterly estimated tax payments to the IRS or choose to have federal taxes withheld from your benefits.Each January you will receive a Social Security Benefit Statement(Form SSA-1099) showing the amount of benefits you received in the previous year. You can use this Benefit Statement when you complete your federal income tax return to find out if your benefits are subject to tax.
thanks for the info! great blog! researching how SSI benefits work and what exactly is required for tax purposes. big help to me!
I’m applying for a poverty tax exemption on my home. Do I legally have to file income tax since SSI & SSD which is under $10,000 is my only income. I have no earned income.
Shelley, no you do not, I had a friend that did the same thing and she did not have to, hope this helps
Iam on SSI,do haveto make out a State return?
I am on ssid,do I have to file a state return?
I worked this year until mid March (2018) and retired at 62 in June of this same year. I understand that I WILL have to pay income tax on the income I made from January to March (2018). My question is…next year (2019) when my source of income will be ONLY Social Security….will I need to file an income tax return? I assumed that anything under $25,000 is not required to pay tax on it? Is this correct.
We receive SSDI and Long term disability insurance payments. Is long-term disability taxable? If not, then is it considered reportable income when qualifying for the max income bracket for tax purposes? Or, do we just go by what we receive in SSDI? I’ve not been given clear answers on that as of yet.
My friend has a daughter who is on SSDI and he is on it too. He wants to know if he has to put her on his taxes as a dependent. He would like to do Single.
Does she need to do a 1040 for her SSDI benefits or not. It is like $12,000 – $13000 range.
Thank you for your reply.