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Are Social Security Benefits Taxable?

Tax season is here, and for many Americans, it brings questions about which types of income are and are not taxable. Tax law is complicated and many individuals who have more than one source of income or a significant investment portfolio turn to accountants to handle their taxes at the end of each year. Certain benefits are tax-exempt, which means that individuals who receive them are not required to pay taxes on them.

You might be wondering whether Social Security disability benefits are taxable. The answer, though it might be unsatisfying, is “sometimes, depending on your income level.” Yes, Social Security disability benefits are subject to federal tax, but you might not be required to pay tax on yours if your income falls below a specific threshold. To determine whether you are required to pay tax on your Social Security disability benefits, consult with an experienced New York social security disability attorney.

Approximately One Third of Social Security Disability Benefits Recipients Pay Federal Taxes on Them

Keep this figure in mind. The individuals who make up this figure are in this position mostly because they have spouses whose incomes bring their total income amount to $32,000 or higher. In some other cases, it is because they have other types of income like self-employment or dividends that bring them to this income level.

  • Individuals whose monthly income is $2,083 or lower pay no federal taxes on their Social Security disability benefits. For married couples, the threshold for not having to pay taxes on these benefits is $2,666 monthly income;
  • 50 percent of an individual’s Social Security disability benefits are taxed if he or she brings home $2,084 to $2,883 each month. For a married couple, the range for this tax rate is $2,667 to $3,666; and
  • If an individual makes more than $2,884 or a married couple makes more than $3,667 each month, they must pay taxes on 85 percent of their Social Security disability benefits.

In the scenarios listed above where an individual or couple does have to pay taxes on their benefits, the benefits are taxed at the individual or couple’s marginal income tax rate.

Some states also impose state taxes on Social Security disability benefits. These states are:

  • Connecticut;
  • Colorado;
  • Iowa;
  • Kansas;
  • Montana;
  • Minnesota;
  • Nebraska;
  • North Dakota;
  • Rhode Island;
  • Utah;
  • Vermont; and
  • West Virginia.

Work with a New York Social Security Disability Benefits Attorney

Tax law is complicated. It is possible for you to face obstacles and legal issues during the process of preparing and filing your taxes for the previous year. If you run into a legal issue with your taxes or simply need to discuss your tax situation with an individual who has a deep understanding of tax law or Social Security law, contact The Law Office of Robert A. Koenigsberg to discuss your case with an experienced social security disability benefits attorney.

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