SSDI Payments: Here's Why Your Benefits Are Getting Taxed
SSDI payments distributed to people with disabilities can be taxable, depending on the type of disability benefit the recipients get and their overall income.
Social Security Administration (SSA) manages Social Security Disability Insurance (SSDI) payments and Supplemental Security Income (SSI), according to AARP. SSDI payments can be potentially taxed, with the same set of rules and requirements as Social Security retirement, family, and survivor benefits.
On the other hand, SSI cash assistance is not subjected to income tax. It is meant for disabled, blind, and older people with low incomes and limited financial assets. Social Security distributes the funding for the program, but the budget comes from the U.S. Treasury and not from Social Security taxes.
READ NEXT: Unemployment Benefits California: Do Part-Time Workers Qualify?
SSDI Tax
A portion of your SSDI benefits will be taxed if you are single and earn more than $25,000 annually, which will include 50% of your SSDI benefits. The amount of your SSDI payments will be taxed depending on the amount of money you make.
Usually, tracking how much of your SSDI payments are taxable can be difficult to identify if you earn more than $2,083 per month, according to MARCA. Computations are commonly done using the Social Security tax calculator or the IRS Form 1040 tax return.
The Internal Revenue Service noted that your benefits might be taxable if the total of one-half of your benefits, plus all of your income, including tax-exempt, is greater than the base amount of filing status.
The standard base amount for filing status is $25,000 for a single, head of household or qualifying surviving spouse; $25,000 if married filing separately and lived apart from their spouse for an entire year; $32,000 if filing jointly; and $0 if you are married filing separately and lived with your spouse at any time during the tax year.
SSDI payments can also be taxable if you receive income from other sources, including dividends or tax-exempt interest, or if your spouse earns income.
SSDI Benefits
SSDI benefits issue payments to you and some family members if you have worked long enough and paid Social Security taxes. To be eligible for this program, applicants must be deemed unable to work due to a medical condition projected to last for at least a year or result in death.
They should also not have a partial or short-term disability, meet SSA's definition of disability, and be younger than the full retirement age.
Some of the documents needed when applying for SSDI benefits include proof of date and place of birth, marriage and divorce, names and dates of birth of children, U.S. military service, employment details, and direct deposit information.
Applicants are also required to list information about their doctors or health providers, including their medical records. Applicants' job histories should also be included, and their education and training.
After reviewing the application, SSA authorities will contact applicants if they have further questions. Additional documents might also be requested before they can fully proceed.
READ MORE: SSDI Benefits February: When Will You Get Your $3000+ Payments?
This article is owned by Latin Post.
Written by: Mary Webber
WATCH: How Social Security Works - From CNBC
Subscribe to Latin Post!
Sign up for our free newsletter for the Latest coverage!