Received back pay from SSDI in 08, but some of that money was for 07. Is that money taxable? If so does it all get claimed for 08 or does something have to be done for 07 taxes? Receive monthly SSDI, no other earned income. I do receive money monthly from a LTD policy that has already been determined not taxable by the CPA that did my taxes the last partial year that I worked in 06, because something like the policy was paid with after tax dollars. I did not have to file in 07 as the LTD was not taxable. Now I have the SSDI and the back pay & not sure how of if that has to be claimed as taxable income.
Thanks for any help that is provided. This is my first quesiton here so I hope I did this right.

twinkiedooter

This is a very complicated issue and you need to consult with your CPA to see how this should be handled. You didn't state your filing status (single or married) so I can't really give you a good answer on this question.

Shazzie

Thank you Twinkiedooter for the quick response & trying to help anyway. To Clarify if anyone else comes along, I went to IRS website, and I'm trying to figure the worksheet, but not sure If I understand what I am doing...Ok, would be single, received total SSDI 33,768 last yr including back pay for 07. My monthly is $2000, So I'm trying to follow worksheet, half would be 16,884, then it looks like that tax threshold base amount for single is 25,000. I don't have any other "taxable" income (the LTD is not taxable), oh I do have some minor taxable interest/dividends/ somewhere between only $50-$100, but that doesn't bring it above threshold...not working & no other earned income. Does anyone know if I am reading this right or at least on the right track? & Anything I am missing? Thanks again.

twinkiedooter

Yes, I looked on the net on their site as well and read everything also. It would be best to contact your tax preparer so you make sure if you do owe any taxes, that they are paid. I could not find anything at all about the lump sum payments.

cobrapc

Take it for what it's worth, but I'm asking the same question about taxing back pay and the SS office told me, ''most definitely the back pay is yours to keep, it is not taxed." Twice she told me this after going to ask someone else to make sure. Why I'm still not dancing around, my brother-in-lawyer found the IRS doc 915 which talks about dividing up a lump sum back payment check, and filing it with this years taxes. This lady sounded so sure of herself when she said, "that's yours to keep."

MukatA

If you do not have any other income than SS benefits (including SSDI), then it is not taxable.
A part of your social security benefits may be taxable if half of the SS benefits plus your other income exceeds the base amount. Payment received in 2008 will be treated as 2008 benefit.

cobrapc

I don't have any income personally, but I'm married filing joint. The lady from SS I was talking was so positive that my back pay was all mine and not taxed, even though I told her that my wife makes well of the $35K limit. I just need to have rock solid information, as I've also been told about the doc 915. I have over 3 years of back pay, just shy of $50K, so I've put back about 35% just in case.

Thanks much

AtlantaTaxExpert

Given your wife's income level, SOME of the SSDI lump sum payment will probably be subject to income taxes.

cobrapc

On line with IRS right now, they say 42230 is taxable. Looks like the people at SSA are trying to get me locked up. ;-)

AtlantaTaxExpert

I would NOT trust the IRS calculator.

I strongly recommend you take all of your documents to a local, competent tax professional and let him/her do the calculations for you.