If My Only Income Is From Social Security Disability Benefits Do I Have to File a Tax Return?

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Social Security is a government program that pays American workers not only retirement benefits, but also benefits associated with disabilities. These benefits are paid in installments that are received throughout the tax year and are typically used by the disabled for living expenses. Because disabled people may no longer be able to work, this benefit may be their only source of income. When the time comes to file taxes, this can raise questions over what should be filed, and if a return is necessary at all.

Tax Returns

If you are disabled and receive benefits from Social Security, you may not need to file a tax return. It is not completely necessary to file a return if you do not have any sources of taxable income. But the chances are good that you will have some reason to file a tax return no matter what. If you sold your home, bought a home, made excess contributions to a retirement fund or are entitled to an earned income tax credit, you have to file a tax return. The reasons are so varied you should consider filing a tax return even without taxable income and carefully explore your financial situation in the past year before making any further decisions.

Tax Exemptions

Tax exemptions occur on income that is not taxable -- and this is the key point in filing a return. If Social Security benefits are absolutely your only income -- counting investments, interest, gambling and any other form of income that the IRS requires taxes on -- then you probably do not have to pay taxes on your income at all. If you have had no other pertinent financial activity for the year, then you may be able to avoid filing a tax return at all.

Income Taxes

You may have to file a tax return and pay taxes on Social Security disability benefits if you make enough income. If you are single and your total combined income for the year is greater than $25,000 dollars, you will need to file and pay income tax. If you file a joint return, your limit is raised to $32,000 before you have to pay Social Security taxes. Even at the maximum amount, you will not be taxed on more than 85 percent of your total Social Security payments for the year.

Disability Insurance

Social Security disability should not be confused with disability insurance. Disability insurance is a private option not funded by the government, but paid for by individuals. If you pay premiums out of income that has already been taxed, any benefits you receive from this private insurance are not taxed as income. If your premiums are paid with pre-tax money or paid by an employer, your benefits may be taxable income.

References

About the Author

Tyler Lacoma has worked as a writer and editor for several years after graduating from George Fox University with a degree in business management and writing/literature. He works on business and technology topics for clients such as Obsessable, EBSCO, Drop.io, The TAC Group, Anaxos, Dynamic Page Solutions and others, specializing in ecology, marketing and modern trends.

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