Tax Questions Related to Your Social Security Disability Benefits
If you receive Social Security disability benefits, you should find out if you will have to pay taxes on your benefits. Whether you’ll have a tax obligation depends on your income during the year and the relevant Internal Revenue Service (IRS) regulations. For personalized legal advice regarding your taxes, you may need to consult with a Columbus disability lawyer.
Many people don’t have to pay taxes on their Social Security disability benefits; however, some recipients do have tax obligations if they go over specific income limits. To calculate your income for the year, the IRS looks at Form 1040 to find out your adjusted gross income, to which the IRS adds one-half of the total Social Security benefits received by you during the year and any non-taxable interest. If your benefits were reduced because you had a worker’s compensation offset or another offset for public disability benefits, your income must still count the amount of benefits that weren’t paid to you. If your children received benefits on your account, however, those benefits go toward your child’s taxability rather than toward your own.
An individual with income over $25,000 or a couple with combined income over $32,000 will need to pay taxes on part of their benefits. The taxable percentage of benefits increases if an individual exceeds $34,000 or a couple exceeds $44,000 in income for the year.
If you’re worried about the IRS taxing your benefits because your income for the year includes a large check for past-due benefits, the IRS will likely adjust your obligation as described in IRS Publication 915. The IRS will recalculate your back benefits and treat those benefits as if they were received during the years when you accrued those benefits. If you received a payment for past-due or back benefits, the Social Security Administration must send you a Form 1099 by February 1 in the year after you received that payment. Make sure to check the Form 1099 for accuracy and consult with a Columbus disability lawyer or a tax accountant if anything looks like a mistake.
The IRS does allow for tax relief in certain situations. You might receive a deduction from your tax obligation if you incurred attorney’s fees or if you have a repayment obligation to a carrier of long-term disability insurance. The IRS provides further information in Publication 525.
Tax laws often require a great deal of expertise and legal knowledge. Please speak with a tax specialist or contact a Columbus disability lawyer through Weller Steele Miller, LLC, if you have any questions about the tax obligations from your Social Security disability benefits.
Matthew A. Weller
Columbus Social Security disability attorney
