If you receive monthly Social Security disability benefits, you will need to determine whether they are subject to income taxes. Most of my Ocala disability clients do not have to pay income taxes on their disability benefits. Whether your disability benefits will be taxable depends on your income. You are mostly likely to have a tax liability if you have income from sources in addition to your disability benefits, or if your spouse earns substantial income.
A couple with a combined income of more than $32,000 and an individual with an income of more than $25,000 will pay income tax on a percentage of their Social Security disability benefits. The percentage of benefits subject to tax increases for individuals with incomes above $34,000 per year and couples with incomes above $44,000 per year.
The IRS has a peculiar way of determining your income. The IRS uses your adjusted gross income from Form 1040 plus one-half of the amount of the Social Security disability benefits you received for the year, plus non-taxable interest.
If you receive a large check for back benefits, you may be concerned that it will subject you to tax liability. The IRS will consider your back benefits as received in the year you should have gotten them rather than in the year you actually did, which may keep you under the income level that would subject your benefits to tax. In addition, you may be able to deduct part of your attorney’s fee from your disability benefits.
If you have any questions regarding whether you will have to pay taxes on your Social Security disability benefits, contact your Ocala disability lawyer. Depending on your situation, your lawyer may recommend speaking with a tax professional regarding your disability benefits.
For a free consultation from Ocala disability attorney CJ Henry, call (352) 304-5300 or fill out the claim evaluation form on this page.