Ask Experts Questions for FREE Help !
Ask
    SANDY2008's Avatar
    SANDY2008 Posts: 1, Reputation: 1
    New Member
    		  
    #1

    Jan 31, 2008, 11:11 AM
    SS disability taxable?
    After waiting 3 years, I finally was classified as disabled by the government. I received the retroactive 3 year benefits in one lump sum. Since 9/07, I have received regular monthly disability benefits.

    Are these benefits taxable?

    Thanks, I'm confused.
    twinkiedooter's Avatar
    twinkiedooter Posts: 12,172, Reputation: 1054
    Uber Member
    		  
    #2

    Jan 31, 2008, 01:24 PM
    No. SSDI is not taxable. Consider it just back pay owed to you after winning the lottery. (Just kidding, of course). And you don't have to file taxes if this is your only income.
    oneguyinohio's Avatar
    oneguyinohio Posts: 1,302, Reputation: 196
    Ultra Member
    		  
    #3

    Jan 31, 2008, 01:36 PM
    Congratulations to you for sticking with the peruit of your claim. I know it wasn't easy. I watched my parents deal with that system for years as I was growing up! I would be very careful as far as if there is other income to report that might indicate earnings on your part. There are sometimes amounts that a person can earn and still draw benefits, and other times, at least as far as I am aware, no earnings are allowed. If you have any income from any source such as investments you'll need to file taxes for that stuff.

    You'll want to know the specifics for yourself, as far as if any income might have an effect on your monthly benefit.
    twinkiedooter's Avatar
    twinkiedooter Posts: 12,172, Reputation: 1054
    Uber Member
    		  
    #4

    Jan 31, 2008, 01:40 PM
    True, Ohioguy. The government hopes you get discouraged and go away or die before they finally approve your claim. I've seen people die only one week before they got approved after waiting for 4 years.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #5

    Feb 1, 2008, 11:15 PM
    Sorry, guys! A large lump sum SSDI payment IS taxable.

    SSDI is normally NOT taxable because the amount received falls below a set minimum. The lump sum is above that amount.

    The tax can be mitigated, but some tax WILL be due.
    oneguyinohio's Avatar
    oneguyinohio Posts: 1,302, Reputation: 196
    Ultra Member
    		  
    #6

    Feb 2, 2008, 05:12 AM
    Thanks AtlantaTaxExpert

    I also found that it might be possible to file amended returns and spread the money out over a number of years. You need the award letter telling how much was received for each year... and a good tax preparer unless you have lots of time and knowledge!

    Depending on number of exemtions claimed and other factors, it can have different outcomes as far as total taxes due. Legal fees involved in obtaining the settlement might also play a part in determining tax liability... another good reason for seeking an experienced tax person. My parents had six dependents and it was many years ago when they went through the similar situation.
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #7

    Feb 2, 2008, 06:31 AM
    Up to 85% of your SSDI income may be taxable if 1/2 of SSDI income plus other income exceeds the base amount (around $25,000 for Single).
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #8

    Feb 3, 2008, 07:05 PM
    What is your information source about amending returns to spread the money?

    In my experience, you mus claim rewarded amounts in the year you get the money. It CANNOT be spread out.
    oneguyinohio's Avatar
    oneguyinohio Posts: 1,302, Reputation: 196
    Ultra Member
    		  
    #9

    Feb 3, 2008, 09:33 PM
    Below are three websites that indicate the ability to spread out the income over a number of years. The third one mentions IRS publication 915... again I am not a tax expert and have suggested the OP seeks such advice for their specific case. If you look at the last link, it is IRS publication 915... go to page 11 for the information I am writing about.

    It does appear that it is not considered filing an amended return. I was in error to refer to it as such.

    Know which income is taxable and which is not - The Body

    SSDI Lump Sum - Tax related issues for Veterans - Social, Government, and VA Policy - Veterans Benefits Network - Message Board - Yuku

    Tax Treatment of SSDI Benefits and Lump Sum Payments

    http://www.irs.gov/pub/irs-pdf/p915.pdf
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #10

    Feb 4, 2008, 01:45 PM
    One Guy:

    If you have the time, I suggest you actually do the calculation as required under the Lump-Sum Benefit. I have had the "privilege" of performing this calculation four times.

    You will find that most of the SSDI IS TAXED in the year you get it.

    BTW, there is NO software support for this calculation. It has to be done manually.

    Have fun!
    oneguyinohio's Avatar
    oneguyinohio Posts: 1,302, Reputation: 196
    Ultra Member
    		  
    #11

    Feb 4, 2008, 06:47 PM
    Doesn't look like something I'd want to try! For this person's specific case It would require their tax statements for the previous years... I could easily see it turning into a long tedious process! You guys earn your money for sure!
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #12

    Feb 6, 2008, 01:46 PM
    Pity! It would be a learning experience for you.
Not your question? Ask your question View similar questions
 

Question Tools Search this Question
Search this Question:

Advanced Search

Add your answer here.


Check out some similar questions!

IS disability income either from Social Security or Prudential taxable [ 11 Answers ]

Mu social secuirty disability is 2050 a month. I bought (through my former employer) long term diability insurance with after tax dollars (no employer contribution). The total between the two is approx 5400/mo. Is this income taxable and if so to what extent?

SSI and Disability taxable if you pay property taxes? [ 1 Answers ]

Hi, I'm a 51 year old grandma on ssi and disability. My 25 year old daughter is also on ssi and disability and just had a child in September. I pay property taxes on my trailer of 350 dollars per year... is there any way to claim this grandson or the property taxes... and get anything back?? ...

Is $15,000 total income from Social Security disability taxable. [ 1 Answers ]

I get Social Security disability for a total of $14,382.00. I received a total of $13,260.00 the other $1,122.00 went to Medicare part B. My question is this, this is my only income do I have to file with the IRS?. I couldn't make much sense of the info on their site, I would appreciate any help....

Social security disability : is it taxable? [ 3 Answers ]

I have just been approved for social security disability and would like to know if the back award is taxable or if themonthly benefit is taxable?

QUICKBOOKS Inventory Items taxable or non-taxable [ 0 Answers ]

I have Quick Books Basic. Our small business sells clothing. Recently moved from Pennsylvania (where clothing is a non-taxable item) to Washington (where clothing is a taxable item) So inventory items were all entered in Pennsylvania as non-taxable. And now that we are in Washington they ought...

View more questions Search