Will the money I receive monthly for disability from Social Security (SSA) be taxed?
A common question many people have when receiving monthly Disability checks (either from SSDI or SSI) is whether these benefits will be taxed. While SSDI and SSI programs provide financial help, their taxation rules differ significantly, and it’s important to understand these differences
Taxation of SSI Benefits
Firstly, SSI benefits are generally not subject to federal income taxes. The primary reason is that SSI is a need-based program designed for people with limited income and resources. Since SSI is considered a form of welfare assistance rather than earned income, it is excluded from taxable income.
Taxation of SSDI Benefits
SSDI benefits on the other hand, can be subject to federal income taxes, but it depends on your overall income. If you have other sources of income in addition to your SSDI benefits, such as wages, interest, dividends, or even money received from family or friends, your SSDI benefits might become taxable. The key factor is your “combined income,” which is calculated by combining the amount of your adjusted gross income (AGI), plus any nontaxable interest, and half of your SSDI benefits.
If your combined income is below $25,000 for an individual or $32,000 for a married couple filing jointly, you will not owe federal taxes on your SSDI benefits.
But if it exceeds the $25,000 or $32,000 threshold, a portion of your SSDI benefits may be taxed with a percentage that can range from 0% to 85%, depending on your combined income level.
Conclusion
Regardless of which Disability benefits you are getting, if you have any questions be sure to reach out to a tax professional who can provide guidance tailored to your specific situation.
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