Law Office of Jennifer Zorrilla

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Are SSD benefits taxable?

Although it is perhaps our nation’s most important social program, most people, including those who live in California, probably know very little about Social Security benefits, especially SSD benefits. Therefore, it may come as a surprise to them that more than 62 million people receive a guaranteed payout from the Social Security Administration monthly, of which more than 20 million rely on these benefits to keep them out of poverty. Additionally, 175 millions workers are covered by this security net in case they die untimely or are severely injured.

One of the main issues many people do not realize is that it is possible that Social Security Disability benefits are subject to taxes. Although the majority of SSD and SSI benefits are not taxable, if either the beneficiary or their spouse has another substantial source of income, they may likely end up getting taxed on their benefits.

Whether someone is filing taxes separately or jointly, there are certain income levels in place that determine if the benefits will be taxed or not. If an individual’s income is more than $25,000 and less than $34,000, then about half of their benefits will be taxed. If the beneficiary is married and is filing jointly, about half of their SSD benefits will get taxed if their combined income is more than $32,000.

If someone has received a lumpsum payment or a back payment of their benefits, then that could also become subject to taxes. It is important to understand how income can affect a person’s SSD benefits and getting the right information is crucial.

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