Do Social Security Benefits Get Taxed?

Do Social Security Benefits Get Taxed?

The intricate world of Social Security benefits can be scary and confusing to navigate. Likewise, tax season is a daunting beast. As October arrives, the new fiscal year resets many clocks and wallets. If you are receiving Social Security Benefits, it is important to know which ones are subject to taxation and by whom.

Which type of Social Security Disability benefits get taxed?

Social Security is responsible for paying out monthly retirement checks, survivors’ benefits, disability, and supplemental security income payments. Amidst all these payouts, only SSI payments are not taxable. Disability, retirement, and survivors’ benefits are all liable to taxation.

What percent of Social Security Disability benefits are taxable? How do I know if I need to pay taxes on benefits?

Disability benefits (SSDI) has specified brackets to place people inside or outside the tax limits. According to the IRS website:
“Your benefits may be taxable if the total of (1) one-half of your benefits, plus (2) all of your other income, including tax-exempt interest, is greater than the base amount for your filing status.
The base amount for your filing status is:
-$25,000 if you’re single, head of household, or qualifying widow(er),
-$25,000 if you’re married filing separately and lived apart from your spouse for the entire year,
-$32,000 if you’re married filing jointly,
-$0 if you’re married filing separately and lived with your spouse at any time during the tax year.”

When is Social Security not taxable?

The above references federal taxes; most states do not tax Social Security disability benefits. Luckily, Virginia, North Carolina, and Maryland do not charge state taxes on disability benefits. If you are receiving Social Security benefits, be sure that you know what will happen come tax season and how your filing status will affect you and your family.