Most SSDI recipients do not have to file a federal tax return, but some do—and the rule depends on whether you have other income

Social Security Disability Insurance (SSDI) itself is not taxable income in the way wages are. The Internal Revenue Service does not count SSDI as earned income, and you will not owe federal income tax on SSDI payments alone. However, if you have other income—from work, investments, pensions, or other sources—you may be required to file a return, and part of your SSDI may become taxable depending on your total income.

The threshold for filing is the same as for anyone else: if your total income exceeds the standard deduction for your filing status and age, you must file. For 2024, the standard deduction is $14,600 for a single person under 65 and $18,150 for a single person 65 or older. If you are married filing jointly, the amounts are higher. The complication is that SSDI can become taxable if your "combined income" (SSDI plus half your SSDI plus all other income) crosses certain thresholds, even if your total income is below the standard deduction.

Key Takeaways

  • SSDI payments alone are never taxable, so if SSDI is your only income, you do not have to file a federal return.
  • If you have earned income from work or unearned income from interest, dividends, or pensions, you may have to file even if your total is below the standard deduction.
  • Up to 85 percent of your SSDI can become taxable if your combined income is high enough, which affects whether you owe tax and how much.
  • You should file a return if you had federal income tax withheld from any other income, because you may be owed a refund.
  • The IRS Form SSA-1099 you receive each January shows your SSDI payments for the prior year and is used to calculate whether any is taxable.

How SSDI becomes taxable when you have other income

The IRS uses a formula called "combined income" to decide whether your SSDI is taxable. Combined income is calculated as: your adjusted gross income (AGI) plus nontaxable interest plus half of your SSDI benefits. If that total exceeds $25,000 (for a single filer) or $32,000 (for married filing jointly), some of your SSDI becomes taxable.

The taxable portion is the lesser of two amounts: either half of the amount by which your combined income exceeds the threshold, or 85 percent of your total SSDI. For most people, it is the smaller number. This means that even if you have other income, you may not owe tax on all of your SSDI—and you may not owe tax at all, depending on your tax bracket.

Example: You are single and receive $1,500 per month in SSDI ($18,000 per year). You also earn $12,000 from part-time work. Your combined income is $12,000 + $9,000 (half your SSDI) = $21,000. This is below $25,000, so none of your SSDI is taxable. You owe tax only on the $12,000 in wages.

Another example: You are single and receive $1,500 per month in SSDI ($18,000 per year). You have $20,000 in pension income. Your combined income is $20,000 + $9,000 = $29,000. This exceeds $25,000 by $4,000. The taxable portion of SSDI is the lesser of $2,000 (half of $4,000) or $15,300 (85 percent of $18,000). So $2,000 of your SSDI is taxable, along with your $20,000 pension.

When you must file even if you owe no tax

You should file a return if federal income tax was withheld from any of your income, even if you ultimately owe no tax. This is the most common reason SSDI recipients file: they had taxes taken out of wages or pension payments and need to claim a refund.

You should also file if you had a net loss from self-employment, because you may be able to carry that loss forward to reduce future tax liability. And if you are claimed as a dependent on someone else's return, the rules for when you must file are stricter—you may have to file even with very little income.

The IRS does not send notices demanding that you file if you are below the threshold. If you do not file and you do not owe tax, there is no penalty. However, if you are owed a refund and do not file, you forfeit it after three years.

What documents you need and where to find them

In January of each year, the Social Security Administration sends you a Form SSA-1099, which shows your SSDI payments for the prior calendar year. This form goes to the IRS automatically, so the agency knows you received SSDI. You will need this form to file your return, and you should keep it with your tax records.

You will also need Form 1040 (the main federal income tax return) or Form 1040-SR if you are 65 or older. If you have only wages, you may be able to use the shorter Form 1040-EZ, though this form has been simplified in recent years. If you have investment income, rental income, or self-employment income, you will need additional schedules.

If you file through a tax preparer or software, you will enter your SSA-1099 information when prompted. The software will calculate whether any of your SSDI is taxable based on your other income. If you file by hand, you will need IRS Publication 915, which contains the worksheets for determining taxable SSDI.

How work incentives affect your filing requirement

If you are working while receiving SSDI, you may be using a work incentive such as the Student Earned Income Exclusion (SEIE), the Plan to Achieve Self-Support (PASS), or Impairment-Related Work Expenses (IRWE). These programs allow you to exclude certain earnings or expenses from the income calculation that determines whether your SSDI continues.

However, these exclusions do not explore to the tax code. The IRS does not recognize PASS or IRWE for tax purposes. You must report all earned income to the IRS, even if Social Security excludes part of it from the SSDI calculation. This means you could owe federal income tax on earnings that do not affect your SSDI payment.

For example, if you use PASS to set aside $500 per month toward a business goal, Social Security does not count that $500 as income when deciding your SSDI payment. But the IRS does count it as income when calculating your tax liability. You will report the full amount on your tax return.

State income tax and SSDI

Most states do not tax SSDI, but a few do. Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont tax SSDI under certain conditions, usually when your total income exceeds a threshold or when you are below a certain age.

The rules vary by state. Some states follow the federal combined-income formula; others use a simpler threshold. Some states exclude SSDI entirely if your income is below a certain level. You should check your state's tax agency website or ask a tax preparer whether your state taxes SSDI and whether you must file a state return.

If you live in a state that taxes SSDI and you file a federal return, you will usually file a state return as well. The state will use information from your federal return to calculate your state tax liability.

What happens if you do not file when you should

If you owe federal income tax and do not file, the IRS will eventually contact you. The agency assesses penalties for late filing and late payment, plus interest on any unpaid tax. The penalty for not filing is usually 5 percent of the unpaid tax per month, up to 25 percent. The penalty for not paying is 0.5 percent per month.

If you file late but the IRS owes you a refund, there is no penalty—but you can only claim the refund for three years after the return was due. If you do not file at all and you are owed a refund, you lose it.

If you are receiving SSDI and have other income, filing on time protects you from penalties and ensures you get any refund you are owed. If you are unsure whether you must file, the safest approach is to file anyway. Filing when you do not owe tax costs nothing and takes a few hours.

Frequently Asked Questions

Can I file my taxes online if I receive SSDI?

Yes. The IRS offers free filing software through its Free File program if your income is below a certain threshold (usually around $79,000 for 2024). You can also use paid software like TurboTax or H&R Block. When you file, you will enter your SSA-1099 information, and the software will calculate whether any SSDI is taxable based on your other income.

What if I did not receive a Form SSA-1099?

Contact Social Security at 1-800-772-1213 or visit your local Social Security office. You can also create an account at ssa.gov and view your SSA-1099 online. If you file without the form, the IRS will match your return against Social Security's records, so discrepancies may trigger a notice later.

Does filing taxes affect my SSDI payment?

No. Filing a tax return does not change your SSDI payment or your may be able to access. The IRS and Social Security are separate agencies. However, if you have earned income from work, that income may affect your SSDI under Social Security's earnings rules, regardless of whether you file taxes.

Can I claim the Earned Income Tax Credit (EITC) if I receive SSDI?

Yes, if you have earned income from work. SSDI itself does not count as earned income for EITC purposes, but wages do. You must file a return to claim the EITC, and you must meet income and other requirements. The EITC can result in a refund larger than the tax you paid.

What if I owe back taxes from years I did not file?

You can file amended returns for prior years using Form 1040-X. The IRS generally allows you to claim refunds for three years back. If you owe tax from prior years, contact the IRS or a tax professional about setting up a payment plan. The IRS may also offer an Offer in Compromise if you cannot pay the full amount.