Do you have to file taxes on Social Security? How about when you are disabled? Do you have to file taxes on the disability income then?
A lot of people with disabilities who have low income and minimal resources receive Supplemental Security Income, called SSI. And so do elderly people over 65 years, with similar financial challenges. But some people with disabilities get Social Security Disability Insurance benefits, called SSDI by accumulating the required work credits.
Quite a few people with disabilities who receive such Social Security payments have other income in addition to their benefits. Whether or not they have to file taxes and whether or not benefits are taxable depends on several factors, including whether you also earn money from wages.
Read More: Do You Pay Taxes on Social Security?
SSI and SSDI Recipients Return Requirements
Disabled individuals may complete a Social Security disability application form and, if approved, receive a monthly benefit. People with disabilities who have worked and paid Social Security taxes for several years may qualify for SSDI. A person with a disability who doesn’t meet the work requirement may receive SSI payments instead.
In either case, the benefits are not usually taxable. Many people with disabilities who work remain eligible for part or all of their benefits. A disabled person who does have other income is subject to the same tax filing requirements as anyone else. In such cases, recipients of SSDI file taxes to adhere to IRS regulations.
When you are on Social Security disability, don’t include your benefits when deciding if you have to file taxes. The Internal Revenue Service says most taxpayers must file when their gross income exceeds a specified limit.
When Do People on Disability Have To File Taxes?
Sometimes you have to file taxes even if you don’t have much income other than disability benefits. Filing is usually mandatory when you owe the IRS money, or if you are self-employed and make more than $400.
There are times when you’ll want to file a return even though you don’t have to. For example, if you expect a refund of payroll taxes withheld by an employer or if you qualify for a tax credit, you need to file taxes to get the money. However, remember that SSDI payments aren't generally taxed, so you cannot get a disability tax refund. If you earn only SSDI, consider whether you need to file.
Additionally, a portion of Social Security disability benefits may be taxable if you have too much other income. The rules the IRS uses to determine if benefits are taxable are the same that apply to Social Security retirement benefits.
To find out if some of your benefits may be taxable, add 50 percent of your annual disability payments to your other income. If the total is over $25,000 and you file as a single person, at least 50 percent of your Social Security disability benefits may be taxable, and you have to report the taxable amount on your tax return. If you file a joint return with your spouse, the limit is $32,000.
Read More: Do You Pay Taxes on Disability Payments?
Filing Requirements for 2021
For the 2021 tax year, if you're single, you'll need to file a tax return if your gross income exceeds $12,550. And if you're married and filing jointly, but neither you nor your spouse is a dependent, you must file taxes if your gross income exceeds $25,100. In addition, if you are a head of household, you must file once your income exceeds $18,800. In any other case, you must file a return, regardless of income.
Read More: Who Must File Income Taxes?
Based in Atlanta, Georgia, W D Adkins has been writing professionally since 2008. He writes about business, personal finance and careers. Adkins holds master's degrees in history and sociology from Georgia State University. He became a member of the Society of Professional Journalists in 2009.