Orange County Lawyers Discuss Taxes on Social Security Disability –

April 2016 is almost upon us – and everyone’s thoughts turn to Springtime . . . and income taxes!

Our experienced Orange County Social Security lawyers get questions every April about Social Security benefits and taxes. Here are some answers to your general questions about your 2015 taxes and Social Security benefits.

How to Know if You’ll Be Taxed on Social Security – Orange County Lawyers

Whether you are taxed on your Social Security Disability benefits will depend upon how much total income – including your Social Security Disability benefits – you receive.

If you are married and you file taxes jointly with your spouse, your spouse’s income will also be a factor in determining whether you are taxed on your Social Security Disability benefits.

This article will state the “general rules” about taxes on Social Security Disability benefits. However, this is a complex subject and you should consult an experienced Social Security Disability lawyer OR accountant to determine if you will be taxed on any of your Social Security Disability benefits.

California State Taxes on Social Security Disability Benefits

Most states – including California – do NOT tax Social Security benefits. Only 12 states tax money received for Social Security benefits. However, the Federal Government (IRS) DOES tax Social Security Disability Benefits IF you have enough income.

Federal (IRS) Taxes on Social Security Disability Benefits

About one-third of Social Security Disability recipients end up paying the IRS some taxes on a portion of their Social Security Disability benefits.

(Note that this article is about SSD recipients and NOT about SSI recipients. SSI recipients usually do not have to pay taxes, because if they had enough income to be taxed, they wouldn’t qualify for SSI.)

• Single Individuals & Taxes on Social Security Disability

If you are single, a portion of your SSDI benefits will be subject to tax IF you have more than $25,000 in total income per year.

If your disability benefits are subject to being taxed because your income is above this limit, you still only pay taxes on a “portion” of your Social Security Disability benefits.

See the chart below for what “portion” of your Social Security Disability benefits will be taxed.

• Married People & Taxes on Social Security Disability

If you are married and you file your federal taxes jointly, a portion of your SSDI benefits are subject to tax IF you and your spouse have more than $32,000 per year in income (including SSDI benefits).

If your disability benefits are subject to being taxed because your joint income is above this limit, you still only pay taxes on a “portion” of your Social Security Disability Benefits.

See the chart below for what “portion” of your Social Security Disability benefits will be taxed.

When the IRS Taxes “Lump Sum” Social Security Disability Benefits

If you receive a lump-sum payment for back payments and/or retroactive benefits you may have to pay taxes on it. A lump sum can make your tax rate higher than usual, as a result of the additional income from the lump sum. However, you may be able to claim a part of the lump sum income to a previous year, and possibly lower your tax bill. Consulting an experienced lawyer or accountant is always advised if you will be receiving a lump sum benefit.

Our Orange County Social Security Lawyers Can Help You

This article states the “general rules” about taxes on Social Security Disability benefits. However, this is a complex subject and you should consult an experienced Social Security Disability lawyer OR accountant to determine if you will be taxed on any of your Social Security Disability benefits.

If you are collecting or applying for Social Security Disability benefits, and want to understand the tax consequences, call our experienced Orange County Social Security Disability lawyers for a free consultation.