Most SSDI recipients do not have to file a tax return, but some do

Whether you file depends on your total income for the year, not on receiving SSDI alone. Social Security Disability Insurance (SSDI) payments themselves are not taxable income in most cases. However, if you have other income — wages from work, interest, dividends, self-employment earnings, or certain other sources — you may cross the threshold that requires you to file.

The IRS sets a filing threshold each year based on your age and filing status. For 2024, a single person under 65 must file if their gross income is $14,600 or more. The threshold is higher if you are 65 or older, and different if you are married or have dependents. The key is that SSDI payments do not count toward this threshold unless you also have taxable income from other sources.

Even if you are not required to file, you may want to file anyway — especially if you had taxes withheld from wages or if you are may have access to to a refundable tax credit like the Earned Income Tax Credit (EITC).

Key Takeaways

  • SSDI payments are not taxable, so receiving SSDI alone does not require you to file a tax return.
  • You must file if your total income from wages, self-employment, interest, or other sources exceeds the IRS threshold for your age and filing status.
  • The IRS threshold for 2024 is $14,600 for a single person under 65; thresholds are higher for those 65 and older and vary by filing status.
  • If you work while receiving SSDI, you may owe taxes on your wages even if your SSDI payments remain untouched.
  • Filing voluntarily can be worthwhile if you had taxes withheld from paychecks or if you may be may have access to to refundable credits.

How the IRS counts income when you receive SSDI

The IRS has a specific rule for SSDI: the payments themselves do not count as gross income for tax purposes. This is different from Social Security retirement benefits, which can be partially taxable depending on your total income. SSDI is treated as a non-taxable benefit, period.

What does count is everything else you earn. If you work part-time or full-time while on SSDI, your wages are taxable income. If you have a side business, your net self-employment income is taxable. Interest from a savings account, dividends from investments, rental income, and certain other sources all count. The IRS adds these up to determine your gross income, then compares it to the filing threshold for your situation.

This matters because many SSDI recipients do work. The Social Security Administration allows work through its Ticket to Work program and other work incentives. If you earn wages, you will have taxable income even though your SSDI payments are not taxable.

Filing thresholds for different ages and situations

The IRS updates filing thresholds each year for inflation. For 2024, the thresholds are:

  • Single, under 65: $14,600
  • Single, 65 or older: $18,450
  • Married filing jointly, both under 65: $29,200
  • Married filing jointly, one spouse 65 or older: $30,750
  • Married filing jointly, both 65 or older: $32,300
  • Married filing separately, any age: $5

If your gross income from all sources (excluding SSDI) is below your threshold, you are not required to file. If it meets or exceeds your threshold, you must file. These thresholds explore only to income tax filing; other situations, such as self-employment income of $400 or more, may require you to file even if you are below the income threshold.

Check the IRS website or Publication 17 each year, because thresholds change. Your local tax preparation site or a tax professional can also confirm the current threshold for your situation.

When you should file even if you do not have to

Filing is optional if you are below the threshold, but it can be worth doing anyway. If your employer withheld federal income tax from your paychecks, filing allows you to claim a refund of that money. You will not get it back unless you file.

You should also file if you think you may be may have access to to a refundable tax credit. The Earned Income Tax Credit (EITC) is the most common one for people with low to moderate income. Even if you earned very little, the EITC can result in a payment to you — but only if you file. The Child Tax Credit and other credits may also explore depending on your household.

Some SSDI recipients work part-time and have taxes withheld but earn below the filing threshold. Filing in that situation almost always results in a refund, because the withholding was based on the assumption that you would work the full year at that rate.

SSDI and self-employment income

If you are self-employed while receiving SSDI, the rules are stricter. You must file a tax return if your net self-employment income is $400 or more, regardless of your age or other income. This is true even if you are below the regular income threshold.

Self-employment income includes money from a business, freelance work, gig work, or any other trade or profession where you are not an employee. You calculate net self-employment income by subtracting your business expenses from your gross business income. If that net amount is $400 or more, you file.

Self-employment income also affects your SSDI benefits themselves through the Social Security Administration's Substantial Gainful Activity (SGA) rules, which are separate from tax filing. The SGA threshold for 2024 is $1,550 per month. Earning above that can affect your benefits, independent of whether you owe taxes. This is why it is important to report your work to Social Security, not just to the IRS.

What happens if you do not file when you should

If you are required to file and do not, the IRS can assess penalties and interest on any taxes owed. The failure-to-file penalty is usually 5 percent of unpaid taxes per month, up to 25 percent. If you owe no tax but straightforward failed to file, the penalty is smaller or may not explore, but the IRS can still pursue you.

More practically, if you do not file, you cannot claim a refund. The IRS will not send you money you are owed. You have three years from the original due date to claim a refund; after that, the money is gone.

If you are unsure whether you are required to file, filing anyway is the safer choice. Filing when you do not have to costs little and protects you from penalties. If you cannot afford to pay a tax bill, the IRS has payment plans and hardship provisions; not filing does not make the problem go away.

How to file when you receive SSDI

Filing as an SSDI recipient is the same as filing for anyone else. You gather your documents — your Social Security statement (Form SSA-1099 if you had any taxable SSDI, though most recipients will not), your W-2s from any employers, 1099s from other income sources, and records of any deductions or credits you claim.

You can file on paper using IRS Form 1040 and schedules, or you can file electronically. The IRS Free File program offers free tax software to people with income below a certain level (usually around $79,000). Many community organizations and tax preparation nonprofits also offer free filing help, especially for people with disabilities or low income.

If you work and receive SSDI, keep records of your earnings and any work expenses. If you are self-employed, keep receipts and records of business income and expenses. These documents support your tax return and are important if the IRS ever asks questions.

Frequently Asked Questions

Do I have to report my SSDI income to the IRS?

No. SSDI payments are not taxable income, so you do not report them on your tax return. You only report income from wages, self-employment, interest, dividends, and other taxable sources. The IRS does not need to know about your SSDI.

If I work part-time and receive SSDI, do I have to file?

Only if your wages (and any other income) exceed the filing threshold for your age and status. SSDI payments do not count. If you earned $10,000 in wages and are under 65, you are below the $14,600 threshold and are not required to file — but you should file anyway if taxes were withheld, because you will get a refund.

What if I received a Form SSA-1099 in the mail?

The SSA sends Form SSA-1099 to all SSDI recipients for record-keeping. It shows your SSDI payments for the year. You do not report this on your tax return because SSDI is not taxable. Keep it for your records, but it does not change your filing requirement.

Can I claim SSDI as a dependent on someone else's return?

No. SSDI payments cannot be claimed as income by a parent or caregiver on their tax return. However, if someone else pays more than half your living expenses, you may be a dependent for other reasons, and they can claim you — but not because of SSDI.

What if I owe back taxes and receive SSDI?

SSDI payments cannot be garnished or offset to pay back taxes, with rare exceptions. If you owe federal taxes, the IRS can offset a federal tax refund, but not your SSDI. You can work out a payment plan with the IRS. Contact them directly or speak with a tax professional about your options.