Monday, November 14, 2011

What You Need to Know About Paying Taxes on Disability Benefits

NOTE: The information given below is for informational purposes only. Please consult a tax professional for specific questions about paying Federal taxes on your Social Security disability benefits.

Do I pay Federal income taxes on my Supplemental Security Income (“SSI”) disability benefits?

No.

Do I pay Federal income taxes on my Social Security disability benefits?

Yes.

How much do I pay in Federal income taxes on my Social Security disability benefits?

The amount you pay depends on many things.

In general, if you are filing as single, up to 50% (or half) of your Social Security benefits are taxable if your total income is more than $25,000.

If you are filing jointly as a married couple, up to 50% (or half) of your Social Security benefits are taxable if your total income is more than $32,000.

Can I have income taxes withheld from my Social Security disability benefits?

Yes. If you want to have income taxes withheld:

1. Complete IRS Form W-4V;

2. Select the percentage (7, 10, 15, or 25) of your monthly benefit amount you want withheld; AND

3. Sign and return the form to your local Social Security office by mail or in person.

You can obtain a copy of IRS Form W-4V from the IRS website at http://www.irs.gov/pub/irs-pdf/fw4v.pdf or by calling the IRS at 1-800-829-3676. You may also obtain the form by calling Social Security at 1-800-772-1213.

Do I have to pay state or local taxes on my Social Security disability benefits?

Many states and local authorities do not tax Social Security disability benefits. However, you should contact your state or local taxing authority for more information.

For more information about paying income taxes on your disability benefits, please visit www.ssa.gov.

If you have any further questions, please contact your local SSA office or an experienced Social Security attorney. Hiring a Social Security Disability lawyer to handle your case will guarantee that no mistakes are made and no further delays are placed on your case. To find out more, visit us at www.socialsecuritylaw.com.

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