Most SSDI recipients do not have to file a federal tax return

Whether you file taxes depends on how much income you earned that year and whether you have other sources of income. SSDI payments themselves are not taxable income — the Social Security Administration does not count them as wages or earnings for federal tax purposes. However, if you work part-time, receive other income, or your household income crosses certain thresholds, you may be required to file.

The IRS sets different income limits based on your filing status and age. A single person under 65 must file if their gross income exceeds $13,850 in 2023 (this amount changes yearly). If you are 65 or older, the threshold is higher. These limits explore whether your income comes from wages, self-employment, interest, dividends, or other sources — but not from SSDI itself.

Even if you are not required to file, you may want to file anyway. If your employer withheld taxes from your paychecks and you earned less than the filing threshold, you could be owed a refund. The IRS will not send you that money unless you file a return.

Key Takeaways

  • SSDI payments are not counted as taxable income, so receiving SSDI alone does not require you to file federal taxes.
  • If you work or have other income sources, you must file if your total gross income exceeds the IRS threshold for your age and filing status.
  • You may want to file even if not required, because you could receive a tax refund if taxes were withheld from your wages.
  • Your state may have different income thresholds than the federal government, so check your state tax rules separately.
  • If you file taxes, SSDI income should not appear on your return because it is not taxable.

When you must file because of work income

If you work while receiving SSDI, your wages are taxable income and count toward the filing threshold. This is true even if you are in a trial work period or using a work incentive program. Your employer will send you a W-2 form showing what you earned and what taxes were withheld.

Add up all your income sources for the year: wages from your job, self-employment income if you run a business, interest from a savings account, rental income, or any other earnings. Compare that total to the IRS threshold for your age and filing status. If you are over the threshold, you must file. If you are under it but had taxes withheld, you should file to get a refund.

Keep in mind that SSDI has its own work rules. Earning above a certain amount per month can affect your SSDI payment or end your benefits, but that is separate from the tax filing requirement. Work incentive programs like Impairment Related Work Expenses (IRWE) or Plans to Achieve Self-Support (PASS) can reduce your countable earnings for SSDI purposes, but they do not change what you report to the IRS.

When other income sources trigger a filing requirement

You may have to file even if you do not work. Interest from a savings account, dividends from investments, rental income, or income from a pension all count toward the filing threshold. If your total income from all these sources exceeds the IRS limit, you must file.

Some SSDI recipients receive other government benefits alongside their SSDI payment. Veterans benefits, workers' compensation, and unemployment benefits have their own tax rules. Some are taxable, some are not. If you receive any of these, check the IRS rules for that specific benefit or ask a tax preparer whether it counts toward your filing threshold.

How to find the current IRS filing threshold

The IRS updates income thresholds every year. For 2023, a single person under 65 must file if gross income exceeds $13,850. A single person 65 or older must file if gross income exceeds $15,450. If you are married filing jointly and both spouses are under 65, the threshold is $27,700. These numbers change annually, so check the IRS website or your tax software for the current year before deciding whether to file.

Your state may have lower thresholds than the federal government. Some states require you to file a state return even if you do not have to file federally. Contact your state tax authority or check your state's tax website to learn the rules where you live.

What to do if you decide to file

You can file your taxes using tax software, a tax preparer, or the IRS Free File program if your income is below a certain level. When you file, do not include your SSDI payment as income — it does not go on your return. Only report income from work, investments, and other taxable sources.

If you use a tax preparer or software, make sure they know you receive SSDI so they do not accidentally include it. Some people mistakenly think SSDI should appear on the return because it is their main income source, but the IRS rules are clear: SSDI is not taxable.

Keep copies of your tax return and any documents you used to prepare it — your W-2 forms, 1099 forms for other income, receipts, and records of deductions. The IRS can ask for these documents up to three years after you file, and having them organized makes that process much simpler.

What happens if you do not file when required

If you are required to file and do not, the IRS may assess penalties and interest on any taxes owed. The penalty for not filing is usually 5 percent of the unpaid tax for each month the return is late, up to 25 percent. Interest accrues daily on unpaid taxes. If you owe a large amount, these charges add up quickly.

If you realize you should have filed in a previous year, you can still file that return. The IRS generally does not pursue criminal charges for honest mistakes, and filing late is better than not filing at all. If you owe taxes, filing allows you to set up a payment plan rather than facing enforcement action.

SSDI and tax refunds

If you file taxes and are owed a refund, the IRS will send it to you — but there is one exception. If you owe money to a federal agency (such as unpaid student loans or a debt to the Department of Education), the IRS can intercept your refund and send it to that agency instead. This is called a tax offset. SSDI payments themselves cannot be offset, but your tax refund can be.

If you think your refund may be offset, you can check the Treasury Offset Program website before filing. If an offset is pending, you have the right to request a hearing to dispute it. The IRS will tell you about any offset when they process your return.

Frequently Asked Questions

Do I have to report my SSDI income on my tax return?

No. SSDI payments are not taxable income and do not go on your federal tax return. If you file, you report only your wages, self-employment income, investment income, and other taxable sources. SSDI should not appear anywhere on the form.

I work part-time and receive SSDI. Do I have to file taxes?

You must file if your total gross income (wages plus any other income) exceeds the IRS threshold for your age and filing status. SSDI itself does not count toward that threshold, only your wages do. Check the current year's threshold on the IRS website or with a tax preparer.

What if I earned very little and do not think I owe taxes?

You may still want to file if your employer withheld taxes from your paychecks. Filing allows you to get a refund of that money. The IRS will not send you a refund unless you file a return.

Can the IRS take my SSDI payment if I owe back taxes?

No. SSDI payments are protected from most debt collection, including back taxes owed to the IRS. However, if you receive a tax refund, the IRS can use it to pay off back taxes or other federal debts. Your SSDI deposit itself cannot be touched.

Does filing taxes affect my SSDI benefits?

Filing a tax return does not change your SSDI payment. However, if you work and earn income, that work income can affect your benefits under SSDI's work rules — but that is separate from taxes. Report your work earnings to Social Security as required, and file your taxes separately.