Are Social Security disability benefits taxable?

Social Security and taxes

People often ask, “Do I have to pay taxes on Social Security benefits?”

SSI benefits are not federally taxable.

Things get a bit more complicated with SSDI benefits. Here is the answer directly from Social Security:

Question: I receive Social Security disability benefits.  Do I have to pay income tax on these benefits?

Answer: You will have to pay federal taxes on your benefits if you file a federal tax return as an individual and your total income is more than $25,000.  If you file a joint return, you will have to pay taxes if you and your spouse have a total income of more than $32,000.

Social Security has no authority to withhold state or local taxes from your benefit.  Many states and local authorities do not tax Social Security benefits.  You should contact your state or local taxing authority for more information.

For more information, call the Internal Revenue Service toll-free at 1-800-829-3676 and ask for Publication No. 915, Social Security and Equivalent Railroad Retirement Benefits.

If you wish to have federal taxes withheld from your check, read: Withholding income tax from your Social Security benefits.

Via Social Security’s FAQ page.

02/15/10 Update: Keep in mind that the law (including tax law) is subject to change. I encourage readers to check the Social Security site and discuss the taxability of benefits with their tax preparer.

02/26/10 Update:

  • Gordon Gates has a great post on this topic here.
  • The National Organization of Social Security Claimants’ Representatives has a quick information page about Social Security and taxes here.

01/14/11 Update: updating answer based on change on Social Security’s FAQ page.

01/04/12 Updated to discuss SSI benefits.

Getting your prior Social Security files

searching for your prior file

If you are looking at your Social Security exhibit file and you notice that all the exhibits are numbered with a letter in front, such as “B1A, B2A, B1B, B2B,” etc, this means that you are looking at the “B” file — a file for the second application for Social Security disability benefits.

In other words, the first time you file for benefits, Social Security creates an “A” file. Since this may be the only file you ever have, it is not referred to as the “A” file.  However, if you file a second application, the second file becomes the “B” file. The third application becomes part of the “C” file, and so on.

These letters are just a way to distinguish the file and quickly tell whether a file is an earlier file or a later file.

Note: this system does not always work. I have had clients with 5 or more applications and their file had either no letter or it may have only been the “B” file. So, the absence of a letter does not mean there isn’t a prior file, but if there is a letter, then there definitely is a prior file.

So, do you want it and how do you get it?

If there is Social Security information out there, I generally want it. There are exceptions of course. I do not necessarily want a file from 10 years ago, but a file that is only 2 years old may have some valuable evidence in it. It all comes down to the specific circumstances of the case. Sometimes a client tells me that a prior Social Security examiner gave the client a favorable report, or a prior hearing denial said the client was limited to light work and since the client is now 55 year old, that by itself my let the client be approved. Then, absolutely, I want to get my hands on that file!

This usually just means asking for it. I do this by addressing a request, a letter really, to the judge or the judge’s office. I request that the prior file be made available, or requested (if it is in storage) and I state my reasons for why the file may be important in the current case. I have never seen a judge refuse this request.

Then, follow up to make sure the file has been received, and either request a copy of the file on CD or schedule time to make a copy of the file the ODAR (Office of Disability Adjudication and Review) office.

Special Social Security disability rules for “the worn out worker”

Social Security and the worn out worker

Did you know that Social Security has a special disability benefit rule just for individuals who did not complete high school and who have done hard physical work for most of their lives?

Maine and New Hampshire Social Security Attorney Gordon Gates lets you in on this little know exception:

There is an offbeat little provision in the Social Security regulations that grants benefits for a worker who fits a particular vocational profile. This is the “worn out worker” rule.

The rule has 3 requirements for claimants:

1) a marginal education,

2) 35 years or more of only arduous unskilled physical labor,

3) the claimant is unable to do this kind of work because of a severe impairment(s).

Click through to Gordon’s article for details on what consistutes a “marginal” education and more information on how Social Security applies the “Worn Out Worker Rule” to see if it can help you in your case!

via Social Security Disability Lawyer | Maine Social Security Attorney | New Hampshire ALJ Hearings: The Worn Out Worker Rule.

Obama calls for $250 payments to seniors – Yahoo! News

news extra Remember the earlier post about the 2 year freeze (2010 & 2011) on cost-of-living adjustments for Social Security beneficiaries and how it would result in a net decrease in benefits because while benefits may stay the same, Medicare premiums are likely to go up?

Well, it looks like there may be an extra stimulus payment to seniors to help offset the increase.

President Barack Obama called on Congress Wednesday to approve $250 payments to more than 50 million seniors to make up for no increase in Social Security next year.

Check out this article for more information: Obama calls for $250 payments to seniors – Yahoo! News. Unlinked – page no longer available. Sorry folks.

Report wages to Social Security by telephone

Report wages to Social Security

Terry Petterson of DisablogND recently posted about changes in the Social Security rules which now let you report earnings to SSA by telephone:

Beneficiaries, deemors and representative payees reporting a change in wages can report their monthly wages to SSA by telephone. These instructions explain what beneficiaries, deemors, and representative payees need to do in order to use the SSA phone system to report monthly wages.

Beneficiaries, deemors and representative payees who would rather not report wages by telephone can use traditional reporting methods such as mailing or bringing paystubs into their local Social Security office. Monthly telephone reporters who experience technical difficulties should contact their local field office for assistance.

For more information, including when you should call to report wages, and what you need to have before you call, check out the article at DisaBlogND.

Social Security disability benefits and borderline age cases

Social Security disability-just about 50 years

My previous article discussed how Social Security makes it easier for people over 50 years old to receive disability benefits, even if they can still perform some kind of work.

I am 49 years old! I am about to turn 50. Isn’t that close enough?

It might be. If you are within a few months of an age when the Social Security rules change (50, 55, 60),  you might have a “borderline age” case.

Using the example above, if you are 49 years old and within a few months of your 50th birthday,  Social Security may apply the rules for 50-year-olds to your case. This might make the difference between being approved Social Security disability benefits, and being denied!

However, you need to be aware of the borderline age issue and bring it up to Social Security, or to the judge, if you are at the hearing level.

Guest post on Bob Kraft’s P.I.S.S.D. website

Winning Social Security Disability Benefits After Age 50

As part of my series on how to prove you are disabled and eligible for Social Security disability benefits, my latest article, “Winning Social Security Disability Benefits After Age 50” is now on Dallas Texas Social Security disability attorney Bob Kraft’s P.I.S.S.D. (Personal Injury Social Security Disability) website.

Click the link and check it out!

More information about Impairment Related Work Expenses IRWEs!

Social Security IRWEs reduce income

As discussed previously, impairment related work expenses (IRWEs for short — pronounced “Eer-whee’s”) are a way of reducing an individual’s earnings below the substantial gainful activity threshold, and thereby preserve eligibility for disability benefits.

Social Security has a great chart showing examples of which IRWEs are deductible (can be used to reduce income) and which are non-deductible (cannot be used to reduce income): Continue reading More information about Impairment Related Work Expenses IRWEs!

Winning Social Security disability benefits under age 50

50th birthday cake

If you are between 18 years old and 50 years old, you are in the most difficult age range to get Social Security benefits.

Before you turn 18, Social Security uses the “child” standard for disability evaluations.

After you turn 18, though, Social Security uses the “adult” standard. You have to show that you are unable to do any type of work which exists in substantial numbers in the national economy. That bit of legalese basically means that you have to show that you can’t do any kind of work anywhere, anyhow so long as it is a substantial gainful activity (SGA).

Social Security can deny your benefits if you are able to perform work at any exertional level.

Some attorneys do not want such a case such where an individual is less than 50 years old. However it is possible to win a Social Security disability case if you’re under 50.  It is just harder, and the attorney has to work for it. But after all, that is why you are hiring a lawyer in the first place.

What does Social Security mean by sedentary, light, medium, and heavy work?

sedentary medium heavy work

Social Security classifies work into different exertional levels. You might have heard that somebody was denied  because he was still able to do “light work.”

Does  light work in the Social Security case mean the same thing as light work an a workers’ compensation case?

Or, light work that an employer might give you?

Is anything less than the regular job duties, light work?

Actually,  light work is a description of one of the four exertional levels of work (how physically demanding a job is).

Social Security has very specific definitions for all exertional work levels. Let’s take a look at them: Continue reading What does Social Security mean by sedentary, light, medium, and heavy work?