Are Social Security Disability Benefits Taxable in Mobile?

It’s perfectly understandable to worry about losing a portion of your Social Security Disability (SSD) benefits to income taxes.

After all, when health problems have pushed you from work, your finances are tight as it is. Disability benefits provide a modest amount of money. The last thing you want is something chipping away at it.

But most people don’t have to worry.

The Social Security Administration (SSA) says about one-third of people who receive disability benefits pay income taxes on their benefits. The other two-thirds don’t pay these taxes.

Let’s look at how the federal government decides when Social Security Disability benefits are taxable.

If you’re wondering whether you qualify for SSD benefits to begin with, get a free evaluation.

Income Minimums

You only pay taxes on Social Security Disability benefits if your benefits plus any other income you have add up to certain amounts:

  • You pay taxes if your total income is $25,000 or more per year when you file federal income taxes as an individual.
  • You pay taxes at $32,000 or more per year if you file a joint tax return with your spouse.
  • You pay at $25,000 or more if you’re married but file separate taxes from your spouse and you lived apart for the entire year.
  • If you’re married but file separately from your spouse and lived with your spouse for any part of the year, having any income at all triggers the requirement to pay taxes.

You don’t have to count all of your SSD benefits in these totals.

In fact, the Internal Revenue Service (IRS) says to come up with these minimum income amounts for paying taxes, you only have to count half of your disability benefits for the year, along with any other income.

If you’re married filing jointly, you have to add your income and benefits with your spouse’s income. In this case, you always have to include your spouse’s income, even if he or she doesn’t receive disability benefits.

If you want to learn more about applying or SSD benefits, contact us today.

How Much of Your Benefits Are Taxable?

If your income exceeds these limits — putting you in the one-third of Social Security Disability recipients who have to pay income taxes on your disability benefits — the amount you pay depends on exactly how much income you have.

The legal website compiled this scale:

  • If you’re an individual tax filer and your monthly income is $2,083 or less, you pay no taxes on disability benefits.
  • Individuals with $2,084 to $2,833 in monthly income have to declare 50 percent of their disability benefits as income for calculating taxes.
  • Individuals with $2,834 in monthly income or more have to declare 85 percent of their benefits for taxes.
  • Married couples earning $2,666 a month or less pay no income taxes.
  • Married couples earning between $2,667 per month and $3,666 per month must count 50 percent of disability benefits as income for tax purposes.
  • Married couples earning $3,667 a month must include 85 percent of disability benefits as income for taxes.

It might sound alarming that you have to declare 50 percent to 85 percent of your disability benefits for income taxes, but that doesn’t mean you have hand over that much of your benefits in taxes It only means that’s how much you add to your income total for the purposes of calculating taxes.

More likely, your taxes will amount to 10-15 percent of your benefits. Or, if you’re in the higher earning group, it could be 35 percent. It’s the same tax rate as for your other income.

What about Alabama State Income Taxes?

You may also wonder if the State of Alabama taxes your Social Security Disability benefits.

It does not.

In fact, the Alabama Department of Revenue exempts all kinds of income from Social

Security, including retirement income, from your state income taxes.

It doesn't matter what your income is for state tax purposes. All Social Security benefits are tax-free.

Contact us with any questions you have about Social Security Disability benefits and taxes.

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The information on this web site is made available by Gilbert B. Laden, P.C., for informational purposes only and should not be considered legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls, letters and electronic mail. Contacting us does not create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

No representation is made that the quality of legal services to be performed is greater than the quality of legal services performed by other lawyers.

He has been certified as a specialist in Social Security Disability Law by the National Board of Social Security Disability Advocacy, as acknowledged by the Alabama State Bar.