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Understanding taxes and Social Security disability

On Behalf of | Feb 14, 2018 | Tax Law |

For many individuals, the uncertainty of filing taxes can be quite nerve wrecking. For this reason, many seek assistance in filing their tax returns

Even so, it can be helpful for filers to know what to expect through the process. There are a few key things to understand about taxes and how they affect Social Security disability.

Taxable funds 

In many cases, the Social Security Administration does not require people to pay taxes on Social Security disability. However, in specific circumstances, it may happen. The SSA details instances where people may owe taxes on Social Security benefit payments.

Whether they have to pay taxes on their benefits largely depends upon filing status and income. Those who file single and make over $25,000 and those who file joint and make over $32,000 must pay taxes on their Social Security. But, they only pay taxes on a portion of their benefits, up to 85 percent, depending upon their income.

Back payments

Those who receive back payments on their Social Security should be careful when filing. Although they may receive them as one lump sum in a year, it is not a part of the payments for that year. Therefore, they should report the payments as amendments to the previous years they were intended for. This will help to reduce the possible amount of taxes the recipient could owe.

Claims and withholdings

Taxpayers should report the amount that they find on their SSA-1099. If by chance a disabled person does not receive their form, he or she may contact the SSA to retrieve it. For those who know that they will have a tax payment, it may be beneficial to have the SSA hold taxes back. They simply have to contact the SSA and set up a withholding agreement.

This is a brief overview of how taxes may affect Social Security disability. For further detail and explanation, it may be beneficial to speak with a tax attorney to determine the best options available.

We insist that your taxpayer rights are protected and your options are known.

Our services are confidential and are protected under the attorney-client privilege as allowed by law.