Are My Disability Benefits Taxable?

By: Sondra L. Burger

If you have been injured or fallen seriously ill, leaving you unable to work, disability benefits from the Social Security Administration can help you pay for your medical bills and other living expenses. Like any kind of income, however, your disability check is taxable. Some people object to the idea of the government taking money it gives out to help people in need, but we can help you maximize the benefits you receive.

The amount of your disability benefit you receive depends on a number of factors, including your income before you became disabled and any income you may still be receiving. Likewise, the percentage of your disability income that can be taxed varies, too. The SSA uses the idea of your “combined income” in making this decision; your total income plus half of your disability income. When this is over a certain point, more of your disability can be taxed.

As of 2010, filing taxes as an individual with a combined income of less than $25,000 will not result in any of your disability being taxed. Up to half of your disability may be taxable for a combined income between $25,000 and $34,000. Past that, it increases to 85%. Remember that this refers to how much of your income can be taxed, not how much will be taxed. The amount of your disability that is actually taxed may not be that high.

The formula used by SSA is complicated and the result is different for each person. That is why we recommend to our clients that you contact a tax attorney or skilled tax accountant for specific answers to your SS tax questions. The IRS tax code changes yearly making it difficult for us to give competent answers except to say that your disability check is taxable income. Remember; April 15 is tax filing deadline.