You may have to file taxes even though SSDI itself is not taxed

Social Security Disability Insurance (SSDI) payments are not taxable income — the federal government does not tax them. However, you may still be required to file a tax return if you have other income sources. The IRS does not care that you receive SSDI. It cares whether your total income from all sources exceeds the filing threshold for your age and filing status.

The key question is not whether you get SSDI. It is whether you earned money from work, received interest or dividends, had rental income, or collected other types of income that year. If you did, you probably have to file. If SSDI is your only income and you have no other earnings, you likely do not.

Filing when you are not required to can be harmless. Filing when you are required to and do not can cost you — you may miss refunds, lose tax credits, or trigger an IRS notice. The safest approach is to check the IRS filing requirements against your actual income, not your assumptions about SSDI.

Key Takeaways

  • SSDI payments themselves are never taxable, so they do not count toward your filing threshold.
  • You must file a tax return if your income from other sources (wages, self-employment, interest, dividends, rental income) exceeds the IRS threshold for your age and filing status.
  • The IRS filing threshold varies by age, filing status, and type of income — a single person under 65 with only wages must file if they earned more than $13,850 in 2023, but thresholds differ for self-employment income and other situations.
  • If you worked part-time or received other income while on SSDI, you should file even if you think your earnings were small, because you may be owed a refund or tax credits.
  • The IRS does not automatically know you receive SSDI, so you must report your actual income from all sources on your return.

How the IRS filing threshold works with SSDI

The IRS sets a filing threshold — a dollar amount below which you do not have to file. This threshold depends on three things: your age, your filing status (single, married filing jointly, head of household, and so on), and the type of income you received.

SSDI does not count toward this threshold at all. If SSDI is your only income, you are below the threshold no matter how much SSDI you receive. But if you also earned wages, received self-employment income, or had investment income, that income does count. You add it up and compare it to the threshold for your situation.

For example, in 2023, a single person under age 65 with only wage income had to file if they earned more than $13,850. A single person age 65 or older had to file if they earned more than $15,550. These numbers change each year. If you received $20,000 in SSDI and earned $12,000 in wages, you would not have to file because your wage income ($12,000) is below the threshold ($13,850). The SSDI ($20,000) does not count.

When you earned money while receiving SSDI

Many people on SSDI work part-time or have other income. If you did, you need to report that income on your tax return — even if it was small, even if you think you should not have to file, and even if SSDI covered most of your living expenses.

Work incentive programs like Plan to Achieve Self-Support (PASS) and the Student Earned Income Exclusion can reduce how much of your earnings count toward SSDI limits, but they do not change your tax filing requirement. The IRS and Social Security use different rules. You may have to file a tax return to the IRS while also reporting your earnings to Social Security under different thresholds.

If you earned less than the filing threshold but had taxes withheld from your paychecks, you should file anyway. You will likely receive a refund. If you earned income and did not have taxes withheld, filing may still be worth it — you might owe tax, but you could also claim credits like the Earned Income Tax Credit (EITC) that reduce what you owe or increase your refund.

Self-employment income and SSDI

Self-employment income has a lower filing threshold than wage income. In 2023, if you had net self-employment income of $400 or more, you had to file a tax return regardless of your age or other income. This applies even if you also received SSDI.

Self-employment income includes money from freelance work, gig economy jobs, selling goods online, or running a business. You must report it to the IRS even if the amount was small or sporadic. Social Security also counts self-employment income when calculating your SSDI benefit, so you will be reporting it to both agencies — again, under different rules and thresholds.

If you are unsure whether your side work counts as self-employment or whether you crossed the $400 threshold, the safest choice is to file. The IRS can help you figure out what you owe or whether you are owed a refund, but they cannot help you if you do not file and should have.

Investment income, interest, and other sources

Interest from a savings account, dividends from stocks, rental income, or capital gains all count toward your filing threshold. These are not considered "earned income," so they have different rules than wages or self-employment.

In 2023, a single person under 65 had to file if they had more than $1,850 in unearned income (interest, dividends, and capital gains combined). This threshold is much lower than the wage threshold. If you have a savings account, investment account, or rental property, check your statements from the past year. If your total unearned income exceeded the threshold for your situation, you must file.

Again, SSDI does not count. You only add up your interest, dividends, capital gains, and other unearned income. If that total is below the threshold and you had no wages or self-employment income, you do not have to file.

What happens if you do not file when you should

The IRS does not automatically know you receive SSDI or that you had other income. If you should have filed and did not, the consequences depend on your situation. If you owed tax, you will owe penalties and interest on top of the tax itself. If you were owed a refund, you straightforward do not get it — and you have a limited time to claim it (usually three years).

In some cases, the IRS will send you a notice asking why you did not file. If you ignore it, they may file a return for you based on information they have from employers or financial institutions. This return may not include credits or deductions you could have claimed, so you would pay more tax than necessary.

If you received SSDI and also had unreported income, Social Security may also investigate. They want to know whether your earnings should have affected your benefit amount. This is separate from the IRS issue, but both agencies can pursue it.

How to determine your filing requirement

Start by adding up all your income from the past year except SSDI. Include wages (from a W-2 form), self-employment income (from 1099 forms or your own records), interest (from bank statements), dividends (from investment statements), rental income, and any other money you received. Do not include SSDI, Supplemental Security Income (SSI), or other benefits that are not taxable.

Next, find the filing threshold that matches your age and filing status. The IRS publishes these thresholds each year on its website and in Publication 17. If your total income is at or above the threshold, you must file. If it is below, you do not have to file — but you may want to anyway if you had taxes withheld or think you might owe credits.

If you are unsure, filing is the safer choice. A tax professional or a free tax preparation service (many communities offer these through VITA — Volunteer Income Tax information) can help you figure out whether you have to file and what you owe or are owed.

Frequently Asked Questions

Does SSDI count as income for tax purposes?

No. SSDI is not taxable income. The IRS does not count it toward your filing threshold or your taxable income. However, if you have other income sources like wages or interest, those do count, and you may have to file based on that income alone.

I received SSDI and earned $8,000 in wages. Do I have to file?

In 2023, a single person under 65 had to file if they earned more than $13,850 in wages. Your $8,000 is below that threshold, so you are not required to file. However, if your employer withheld taxes from your paychecks, you should file to claim your refund.

What if I had $500 in interest from my savings account and SSDI as my only other income?

In 2023, the threshold for unearned income (interest, dividends, capital gains) was $1,850 for a single person under 65. Your $500 is below that, so you do not have to file. SSDI does not count toward the threshold.

Can I file taxes even if I am not required to?

Yes. Filing when you are not required to is usually harmless and sometimes beneficial. If you had taxes withheld from wages or self-employment income, or if you think you might owe credits like the Earned Income Tax Credit, filing can get you a refund or reduce what you owe.

Where can I find the current filing thresholds?

The IRS publishes filing thresholds each year in Publication 17 (Your Federal Income Tax) and on its website at irs.gov. You can also call the IRS at 1-800-829-1040 or visit a local IRS office. Many free tax preparation services can also tell you whether you have to file based on your income.