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Some Individuals Who Are Eligible for SSDI Benefits May Be Eligible for Tax Refunds

SSDI Benefits
SSDI Benefits; Source- Forbes

With millions of Americans utilizing the program, the significance of Social Security Disability Insurance (SSDI) cannot be overstated. However, receiving benefits may obligate certain people to pay federal taxes; estimates place this need at about one-third of SSDI beneficiaries.

SSDI Benefits

SSDI Benefits; Source- NPR

SSDI Benefits And Tax Refunds

You will probably have to pay taxes if your salary is significant in addition to your benefits. However, if you are receiving SSDI, you may also be eligible for tax refunds. It relies on whether filing could result in a tax refund. For example, you could receive a sizable refund by filing if you are eligible for any tax deductions, such as the earned income tax credit and child tax credit. In rare cases, you may be eligible for a tax refund on disability if you file a claim for specific tax credits but do not owe money. For instance, if you have benefits from an employer-sponsored insurance or pension plan, you might be eligible for a credit for your disability.

Disability Payout Of $1,200

If the person claiming the credit is seeking for work, the IRS also offers a credit for expenses associated with providing independent care for a spouse or dependent. If your only source of income is SSDI and you have very little or no other income, you probably won’t be required to submit a tax return and won’t get a refund. With that amount coming in, you will easily be under the annual criteria given the average social security disability payout of $1,200. The guidelines are slightly different if you are married and filing separately.

Taxation On Social Security Disability Benefits

In the event that you file in this way and reside with your spouse at any point throughout the year, you will owe taxes on 85% of your disability benefits. This is to prevent married people from avoiding paying taxes that would be due on their spouse’s income. Depending on your filing status and income level, the IRS will tax a portion of your social security disability benefits. Your income must be at least $25,000 if you are single. This can be defined as combined income, which comprises half of your social security benefits, taxable wages, interest, dividends, and pensions. This amount increases to $32,000 if you and your spouse are submitting a joint return.

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