Most SSDI recipients do not have to file federal income tax returns

Social Security Disability Insurance (SSDI) payments themselves are not taxable income for federal tax purposes. This means that if SSDI is your only source of income, you will not owe federal income tax and do not have to file a return. The Social Security Administration does not report SSDI to the IRS as taxable wages.

However, the rule changes if you have other income. If you earn money from work, receive interest or dividends, or have other sources of income alongside your SSDI, you may be required to file. The threshold depends on your age, filing status, and what types of income you receive. A small amount of other income can push you over the filing requirement, even if you owe no tax.

Key Takeaways

  • SSDI payments alone are never taxable, so you do not have to file a return if SSDI is your only income.
  • If you have earned income from work, you must file a return once your total income exceeds the threshold for your age and filing status.
  • Interest, dividends, and other unearned income count toward the filing threshold and can require you to file even if you owe no tax.
  • You may want to file voluntarily if you paid taxes through withholding or have a refundable tax credit, even if filing is not required.
  • The IRS has a worksheet to help you determine whether you must file based on your specific income and situation.

When you must file because of earned income from work

If you work while receiving SSDI, your wages are taxable income. Once your total income (wages plus any other taxable income) exceeds a certain threshold, you must file a federal return. For 2024, the threshold is $14,600 for a single person under age 65. If you are 65 or older, the threshold is higher—$17,550 for a single person. These amounts change each year.

The threshold applies to your gross income before any deductions. If you earned $14,700 in wages during the year, you must file even if you owe no tax, because your income exceeds the threshold. The IRS does not care whether you actually owe money; the requirement is based on income level alone.

Keep in mind that SSDI has its own work incentive rules separate from tax filing. You can earn up to a certain amount per month without losing SSDI benefits (called the Substantial Gainful Activity limit, currently $1,550 per month in 2024). Tax filing requirements and SSDI work rules are two different systems, and you must follow both.

When you must file because of unearned income

Interest from a savings account, dividends from investments, capital gains from selling property, and rental income all count as taxable income. If your unearned income exceeds $1,000 in a year, you must file a federal return. This is true even if you have no earned income and receive only SSDI and investment income.

The $1,000 threshold for unearned income is much lower than the threshold for earned income. A single person under 65 with $1,000 in interest and no wages must file, even though they would not have to file if they had $14,600 in wages. This rule catches many people by surprise, especially those with modest savings accounts or small investment portfolios.

How to determine your filing requirement using the IRS worksheet

The IRS publishes a worksheet each year to help you figure out whether you must file. You can find it in the instructions to Form 1040 on the IRS website (irs.gov), or you can call the IRS at 1-800-829-1040 and ask them to mail it to you. The worksheet walks you through your age, filing status, and types of income to give you a yes-or-no answer.

To use the worksheet, you will need to know your total earned income (wages, self-employment income) and your total unearned income (interest, dividends, capital gains, rental income). Write down the amounts and follow the worksheet line by line. The worksheet accounts for the different thresholds for earned and unearned income and for your age.

If you are unsure after using the worksheet, filing a return does not hurt. If you do not owe tax, the IRS will straightforward process your return and send you any refund you are due. Filing when you are not required to file is not a penalty.

Why you might want to file even if you are not required to

You may have taxes withheld from other income sources—for example, if you work part-time and your employer withholds federal income tax from your paychecks. If you withheld more tax than you owe, you will get a refund only if you file a return. The IRS does not send refunds to people who do not file.

You may also be may have access to to refundable tax credits, such as the Earned Income Tax Credit (EITC) if you work and have low income. These credits can result in a refund even if you owe no tax. To claim them, you must file a return. If you think you might may have access to for a credit, filing is worth doing even if the law does not require it.

What happens if you do not file when you are required to

If you are required to file and do not, the IRS may assess a failure-to-file penalty. The penalty is usually 5 percent of the unpaid tax for each month the return is late, up to 25 percent. If you owe no tax, the penalty is zero, but you still face the administrative burden of the IRS contacting you.

The IRS can also delay processing other matters if you have unfiled returns. If you need to claim a loss or credit in a later year, the IRS may not process it until you file the earlier return. Filing late is better than not filing at all, so if you realize you should have filed in a prior year, file that return as soon as you can.

Reporting SSDI on your return if you do file

If you file a return, you do not report SSDI as income on the main tax form. However, you may need to report it on a worksheet if you have other income that makes some of your SSDI taxable. This is rare and applies only to people with substantial income from other sources.

The Social Security Administration will send you a Form SSA-1099 each January showing the SSDI you received in the prior year. You do not attach this to your return, but keep it for your records. If you file, the IRS already knows about your SSDI from Social Security's reports, so you do not need to list it separately.

Frequently Asked Questions

Do I have to file taxes if I only receive SSDI and no other income?

No. SSDI is not taxable income, so if it is your only source of income, you do not have to file a federal return. You owe no tax and have no filing requirement.

What if I work part-time and receive SSDI—do I have to file?

Yes, if your wages exceed the threshold for your age and filing status. For 2024, a single person under 65 must file if they earned more than $14,600. Your SSDI does not count toward this threshold, but your wages do.

I have a small savings account that earns interest. Do I have to file?

If your interest income is $1,000 or more in a year, you must file. Interest is unearned income and has a lower filing threshold than wages. Even $1,001 in interest requires you to file, though you may owe no tax.

What if my employer withheld taxes from my paycheck but I do not owe any tax?

You should file to get a refund of the taxes withheld. The IRS will not send you a refund unless you file a return. If you withheld $500 and owe no tax, filing gets you that $500 back.

Can I file my taxes myself, or do I need a tax professional?

You can file yourself using free software through the IRS Free File program if your income is below a certain level, or you can hire a tax professional. Many community organizations offer free tax help to people with low income. The IRS website lists free resources in your area.