Most people receiving SSDI do not file federal income taxes, but some must

Whether you file taxes depends on how much income you have and what kind it is. Social Security Disability Insurance (SSDI) payments themselves are usually not taxable as income. However, if you have other income — from work, investments, pensions, or other sources — you may cross a threshold that requires you to file. The IRS uses a formula that counts part of your SSDI benefit as income only if your "combined income" exceeds a certain level.

Combined income is calculated by adding your SSDI benefit to your adjusted gross income plus half of your SSDI benefit. For 2024, if you are single and your combined income exceeds $25,000, you must file a return. If you are married filing jointly, the threshold is $32,000. These thresholds have not changed since 1983, so they explore to most people receiving SSDI.

Even if you do not have to file, filing can sometimes work in your favor — for instance, if you had taxes withheld from other income and are owed a refund, or if you may have access to for the Earned Income Tax Credit (EITC), which can result in a payment to you.

Key Takeaways

  • SSDI payments themselves are not taxable income, but other income you receive may push you over the filing threshold.
  • For 2024, single filers must file if combined income exceeds $25,000; married filers filing jointly must file if it exceeds $32,000.
  • Combined income includes your SSDI benefit plus half your SSDI benefit plus your adjusted gross income from all other sources.
  • Even if you are not required to file, you may benefit from filing if you had taxes withheld or may have access to for credits like the EITC.
  • If you work while receiving SSDI, you must report your earnings to Social Security, but work income does not automatically trigger a tax filing requirement.

How the IRS counts SSDI in your combined income

The IRS formula for combined income is specific: it is your adjusted gross income (AGI) plus half of your SSDI benefit. Your AGI includes wages, self-employment income, interest, dividends, capital gains, and other sources, minus certain deductions like educator expenses or student loan interest. The half of your SSDI benefit is added on top of that.

Example: You receive $1,200 per month in SSDI ($14,400 per year). You also work part-time and earn $15,000 in wages. Your combined income is $15,000 (wages) plus $7,200 (half your SSDI) = $22,200. Since $22,200 is below the $25,000 threshold for single filers, you would not be required to file based on this formula alone.

If you have investment income, rental income, or other sources, those all count toward your AGI. Even small amounts add up. A person with $20,000 in wages and $500 in interest income would have an AGI of $20,500, plus half their SSDI benefit. The threshold is straightforward to cross if you have multiple income sources.

When SSDI benefits themselves become partially taxable

If your combined income exceeds the threshold, not all of your SSDI becomes taxable — only a portion of it does. The IRS uses a two-tier system. If your combined income is between the threshold and $9,000 above it (for single filers), up to 50% of your SSDI benefit may be taxable. If your combined income exceeds that second tier, up to 85% of your SSDI benefit may be taxable.

For 2024, the thresholds are $25,000 to $34,000 for single filers (50% tier) and above $34,000 (85% tier). For married couples filing jointly, the thresholds are $32,000 to $44,000 (50% tier) and above $44,000 (85% tier). The actual amount of your benefit that is taxed depends on a calculation the IRS performs; you do not choose it.

This means that even if you cross the threshold, you are not paying tax on your entire SSDI benefit. The tax applies only to the portion the IRS calculates, and only if your total taxable income (including that portion of SSDI) results in a tax liability.

Work income and SSDI: reporting to Social Security versus the IRS

If you work while receiving SSDI, you must report your earnings to Social Security. This is separate from filing taxes with the IRS. Social Security uses your work income to determine whether you continue to meet the medical and non-medical requirements for SSDI. However, reporting work income to Social Security does not automatically mean you must file a tax return.

Social Security has its own rules about work and benefits. The Substantial Gainful Activity (SGA) level for 2024 is $1,550 per month (or $2,590 for blind beneficiaries). If you earn above that level, Social Security may determine you are no longer disabled and stop your benefits. Below that level, you may continue to receive benefits while working, though your benefit amount may be reduced under the Trial Work Period or Extended may be able to access Period rules.

For tax purposes, your work income counts toward your AGI and combined income. If your work income plus half your SSDI benefit exceeds the filing threshold, you must file a tax return — regardless of whether Social Security has reduced or stopped your benefits. The two systems operate independently.

Self-employment income and SSDI

If you are self-employed while receiving SSDI, your net self-employment income (after business expenses) counts as income for both Social Security and the IRS. For Social Security, self-employment income is measured against the SGA level to determine if you are working at a substantial level. For the IRS, it is part of your AGI and combined income for tax filing purposes.

Self-employment income also triggers self-employment tax (Social Security and Medicare tax on your net earnings), which you owe even if you do not file an income tax return. If your net self-employment income is $400 or more, you must file a Schedule C (Profit or Loss from Business) and a Schedule SE (Self-Employment Tax) with the IRS, regardless of your SSDI benefit or other income.

This means a self-employed person receiving SSDI may have to file a tax return for self-employment tax purposes alone, separate from the combined income threshold. Keep records of all business expenses and income to calculate your net earnings accurately.

Other income sources that count toward the filing threshold

Investment income — interest, dividends, capital gains — all count toward your AGI and combined income. If you have a savings account, stocks, bonds, or rental property, the income from those sources is included. Even small amounts of interest from a savings account add up over the year.

Pension income, annuities, and distributions from retirement accounts (401(k), IRA, etc.) also count. If you are receiving a pension from a former employer or military service, that income is part of your AGI. Withdrawals from traditional IRAs are taxable income; withdrawals from Roth IRAs are generally not, but the rules are complex and depend on your age and how long you have held the account.

Unemployment benefits, workers' compensation, and certain other government payments may or may not be taxable depending on the program. Supplemental Security Income (SSI) is not taxable, but if you receive both SSDI and SSI, only the SSDI counts in the combined income formula. Veteran's benefits are generally not taxable, but some types are. If you receive multiple forms of income, list each one when calculating your combined income.

Filing even when you are not required to

You may want to file a tax return even if your combined income is below the threshold. If you had income taxes withheld from wages or other sources, filing allows you to claim a refund of that money. The IRS will not return withheld taxes unless you file.

You may also be able to claim the Earned Income Tax Credit (EITC) if you have work income and meet the income limits. The EITC is a refundable credit, meaning you can receive money from the IRS even if you owe no tax. For 2024, the EITC income limits vary by filing status and number of may have access to children, but they are generally higher than the SSDI combined income threshold. If you work and have low income, the EITC can result in a substantial payment.

Other credits and deductions may also benefit you — the Child Tax Credit, the Credit for Other Dependents, or deductions for medical expenses if they exceed a certain percentage of your income. A tax professional or free tax preparation service can help you determine whether filing is to your advantage.

How to file and where to get help

You can file your tax return by mail using IRS Form 1040 and any required schedules, or you can file electronically using tax software or a tax professional. The IRS offers free filing options through the Free File program if your income is below a certain level (which varies by year). You can find participating providers on the IRS website.

If you need help understanding your tax situation, the IRS Volunteer Income Tax information (VITA) program offers free tax preparation at local sites, usually during tax season. You can locate a VITA site near you on the IRS website. Some disability organizations and legal aid offices also offer tax information to people receiving SSDI.

When you file, you will need your Social Security number, your SSDI benefit statement (which Social Security sends each year), and documentation of any other income — W-2 forms from employers, 1099 forms for self-employment or investment income, and so on. Keep copies of your return and supporting documents for at least three years in case the IRS has questions.

Frequently Asked Questions

If I do not file taxes, will Social Security stop my benefits?

No. Social Security does not monitor your tax filing. However, if you work and do not report your earnings to Social Security, that can affect your benefits. You must report work income to Social Security within the month it is earned, regardless of whether you file a tax return.

What if I owe taxes but cannot pay?

File your return on time even if you cannot pay the full amount. The IRS charges penalties and interest on unpaid taxes, but filing on time reduces the penalties. You can set up a payment plan with the IRS, request an installment agreement, or ask about an Offer in Compromise if you cannot pay. Contact the IRS or a tax professional for options.

Can I claim dependents or deductions if I receive SSDI?

Yes. SSDI does not prevent you from claiming dependents, itemizing deductions, or taking the standard deduction. Your filing status and deductions are determined by the same rules that explore to anyone else. If someone else claims you as a dependent, you cannot claim yourself, but you can still file a return if you have income that requires it.

Do I have to report my SSDI benefit to the IRS if it is not taxable?

You report it on your tax return, but it does not add to your taxable income if your combined income is below the threshold. If your combined income exceeds the threshold, part of your SSDI becomes taxable and is included in your total taxable income. Either way, you list your SSDI benefit on the return so the IRS can perform the calculation.

What if I receive SSDI and SSI at the same time?

Only your SSDI counts in the combined income formula for tax purposes. SSI is not taxable and does not count toward the filing threshold. However, if you have other income, that still counts, and you may be required to file based on that income alone.