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    Do You Want to Know if You’ll Lose Some of Your Disability Benefits to Taxes?

    You need Social Security Disability Insurance (SSDI) benefits because your health makes it impossible for you to work and earn an income.

    But then you think: Do you pay taxes on disability?

    It doesn’t seem fair to lose some of your disability benefits to taxes. The benefits exist to help you take care of yourself and live in peace in a difficult time. Why would they take some away?

    You might not have to worry, because…

    • On their own, Social Security Disability benefits usually aren’t taxable.
    • You’ll generally pay taxes on disability benefits only if your OTHER income sources reach certain levels.
    • Even then, you’ll only have to count a portion of your SSDI for taxes.
    • You will only ever have to pay federal taxes on Social Security Disability. South Carolina doesn’t tax disability benefits.

    So don’t let the fear of taxes stop you from applying for Social Security Disability benefits. Getting those monthly checks can make a major difference in your life even if some of them count for tax purposes.

    For help getting disability benefits in South Carolina, talk to Robertson Wendt Disability. We help people in Charleston, Columbia and every corner of the state.

    We don’t give tax advice. You need to talk to a tax professional to get that. But when you need to apply for disability benefits, or appeal a disability denial, Robertson Wendt is one of the most experienced and respected disability lawyers in the state.

    He is board certified as a specialist in Social Security Disability law by the National Board of Trial Advocacy. That’s a sign of a rare level of knowledge and commitment to helping people deal with the Social Security Disability system. Robertson and his team of South Carolina disability attorneys have helped thousands of people.

    Read more below on when Social Security Disability is taxable. If you need to get approved for benefits, reach out to us.

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    When Is SSDI Taxable Income?

    First, you should know that about 40 percent of people who get Social Security Disability must pay federal income taxes on their benefits.

    The IRS looks at what it calls your “combined income.” Your combined income is half of your disability benefits plus other income that counts for taxes.

    Other income sources could include investment returns, rental property, a pension, alimony and your spouse’s income.

    Here is when the total amount triggers taxes:

    INDIVIDUALS:

    • You’d pay federal income taxes if your combined income is $25,000 to $34,000 a year. In that bracket, you’ll be taxed on up to 50 percent of your disability benefits.
    • If half your disability benefits plus other taxable income goes higher than $34,000, you’d include up to 85 percent of your disability benefits in your tax calculation.

    MARRIED COUPLES FILING TAXES TOGETHER:

    • With income from your spouse included, you’d pay taxes if your combined income is $32,000 to $44,000. You’d pay federal income tax on up to 50 percent of your disability benefits.
    • With total household income over $44,000, you’d pay federal income tax on up to 85 percent of your disability benefits.

    Saying that you include 50 percent or 85 percent of your disability benefits for taxes doesn’t mean you lose that much of your benefits. It means that’s the amount you put into the formula that decides how much taxes you pay.

    If you’re married but file taxes separately from your spouse, you may have to include all income sources in your tax calculation.

    Again, talk to a tax expert to figure out the best way to handle your own taxes and Social Security Disability.

    Talk to Robertson Wendt Disability for help with your Social Security claim itself. Having an initial conversation with our disability law team is always free.

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    Options if You Do Pay Taxes on Disability

    If you find yourself taking a tax hit on your SSDI benefits, it’s no fun.

    Even when you have other sources of income, when you have serious health impairments and no job, money is still tight.

    You have a few options to ease the blow from taxes. Ask a tax preparer about these:

    • Having taxes withheld from your disability benefits up front, so you pay a little at a time
    • Paying estimated taxes every quarter of the year instead of all at once at the end
    • Spreading your taxable income over multiple years (such as lump sum disability payments that cover past years)

    You should also know this: If the type of disability benefits you receive is Supplemental Security Income (SSI) for people with limited work records and financial means, you don’t have to pay taxes on that at all.

    It’s a little more complicated if you receive disability benefits from a private long-term disability insurance policy.
    Whether you pay taxes largely depends on whether your employer paid the premiums for your long-term disability plan, or whether you paid the premiums with money you already paid taxes on.

    The South Carolina Social Security Disability lawyers and long-term disability lawyers at Robertson Wendt Disability prepared this page as a helpful resource for you when you’re wondering, “Do you pay taxes on disability?”

    To make the right decisions about your personal financial situation, talk to an accountant, financial advisor or tax professional.

    For anything else you need involving disability benefits in South Carolina, talk to our disability attorneys. We’re here to help you reach a situation that’s more settled, secure and supported.

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