Do you have to pay taxes on your SSD benefits?
Tax returns are due in just a few short weeks. As April 15 approaches, many people in Dallas who receive Social Security disability benefits may be wondering what exactly their tax obligations are. In today's post, we will help you better understand whether you might have to pay taxes on your SSD benefits.
What you owe -- if anything at all -- will depend on your filing status and your combined income. For example, if you are married and filing jointly and your total combined income is higher than $44,000, it is possible that you will have to pay taxes on as much as 85 percent of your benefits. If your combined income is between $32,000 and $44,000, you will pay taxes on no more than 50 percent of your benefits. Those who are married but file separately will almost always pay taxes on their benefits.
Those filing as individuals follow similar rules. If your combined income exceeds $34,000, you may have to pay taxes on up to 85 percent of your SSD benefits. If your income is less than $34,000 but equal to or more than $25,000, up to 50 percent of your benefits can be taxed.
It is important to know that no one in any situation will have to pay a tax rate on their benefits that is higher than 85 percent.
To better understand which category applies to you, it is important to understand what combined income means. In order to calculate your combined income, you must add your adjusted gross income with your nontaxable interested. That total is then added to half of your Social Security benefits. The final number is your combined income. Form SSA-1099, which everyone who receives benefits should receive in January, can help you better understand what you owe.
This is certainly not a comprehensive overview of taxes and SSD benefits, but we hope it gives you some idea of what to expect this tax season. Of course, an experienced attorney can help you better understand your benefits and your obligations.
Social Security Administration, "Benefits Planner: Income Taxes And Your Social Security Benefits," Accessed March 25, 2015