Whether You Must File Taxes on SSDI Depends on Your Total Income
You may have to file a federal tax return even if your only income is Social Security Disability Insurance (SSDI), depending on how much you earned that year and whether you have other income sources. The IRS does not automatically exclude SSDI from taxable income the way it does some other benefits. The threshold that triggers a filing requirement is lower than many people expect, and it changes based on your age and filing status.
The key number is your combined income—a calculation that includes half of your SSDI benefits plus any wages, interest, dividends, or other income you received. If that combined total exceeds a certain threshold, you owe a return. If you are under 65, single, and have no other income, that threshold is $13,850 for 2023 (the figure varies by year and filing status). If you are 65 or older, the threshold is higher. If you are married, it depends on whether you file jointly or separately.
Even if you do not owe taxes, filing a return can be worth your time if you had income withheld or if you may have access to for refundable tax credits like the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit. The IRS will not send you money you are owed unless you file.
Key Takeaways
- You must file a federal tax return if your combined income (half your SSDI plus all other income) exceeds the threshold for your age and filing status, which ranges from $13,850 to $20,800 for most people in 2023.
- SSDI itself is not automatically taxable, but it becomes taxable income if your combined income is high enough, and then up to 85 percent of your benefits may be subject to federal tax.
- If you earned wages or had taxes withheld from any source, you should file even if you do not owe taxes, because you may receive a refund.
- State tax rules differ from federal rules—some states do not tax SSDI at all, while others have their own income thresholds, so check your state's requirements separately.
- The IRS provides a free tax return preparation service through VITA (Volunteer Income Tax information) if your income is below a certain level, usually around $60,000.
How SSDI Income Is Counted for Tax Purposes
The IRS uses a specific formula to determine whether your SSDI is taxable. It starts by adding up half of your annual SSDI benefits, then adding all your other income (wages, self-employment income, interest, dividends, rental income, and certain other sources). This total is called your combined income.
If your combined income is below the base amount for your filing status, none of your SSDI is taxable. If it exceeds the base amount, you may have to include some or all of your SSDI in your taxable income. The calculation is complex—the IRS uses a two-tier system where the first tier can make up to 50 percent of your benefits taxable, and the second tier can make up to an additional 35 percent taxable, for a maximum of 85 percent of your benefits subject to federal income tax.
This means that even if you have a modest amount of other income, a portion of your SSDI could become taxable. For example, if you are single and have $20,000 in combined income, some of your SSDI will likely be included in your taxable income, even though your total income might seem low.
Filing Status and Income Thresholds
The threshold that determines whether you must file depends on your filing status and age. These thresholds change each year, so you should check the current year's IRS guidelines or use the IRS interactive tax assistant on irs.gov.
| Filing Status | Age | 2023 Threshold (Approximate) |
|---|---|---|
| Single | Under 65 | $13,850 |
| Single | 65 or older | $17,550 |
| Married filing jointly | Both under 65 | $27,700 |
| Married filing jointly | One spouse 65 or older | $28,700 |
| Married filing jointly | Both 65 or older | $29,700 |
| Married filing separately | Any age | $25,000 |
These thresholds explore to your combined income, not your SSDI alone. If you have no other income and receive only SSDI, you will not reach these thresholds unless your annual SSDI benefit is very high (which is uncommon). However, if you have even modest wages or other income, the combined total may push you over the threshold.
When You Should File Even If You Do Not Owe Taxes
You should file a federal tax return even if your income is below the filing threshold if you had federal income tax withheld from your pay or if you may be owed a refundable tax credit. The IRS will not automatically send you a refund—you must file to claim it.
If you worked part-time or had a job for part of the year, your employer may have withheld federal income tax from your paychecks. Filing a return allows you to recover that money. Similarly, if you have dependent children or a dependent spouse, you may may have access to for the Child Tax Credit or the Earned Income Tax Credit (EITC), both of which can result in a refund even if you owe no tax.
Some people on SSDI also receive Supplemental Security Income (SSI) or work part-time. If you fall into either category, filing becomes more likely to be worth your time. The same applies if you have interest income from a savings account or received a 1099 form from any source.
State Tax Rules for SSDI Recipients
Federal tax rules and state tax rules are separate. Some states do not tax SSDI at all, while others tax it under the same rules as the federal government, and still others have their own thresholds and calculations. You may owe state taxes even if you do not owe federal taxes, or vice versa.
States that do not tax SSDI include California, Illinois, Louisiana, Mississippi, New York, Ohio, and Pennsylvania, among others. However, this list changes, and some states have income thresholds that differ from the federal thresholds. You should contact your state's tax authority or visit its website to confirm the current rules for your state.
If you live in a state that taxes SSDI and your combined income exceeds your state's threshold, you will need to file a state return in addition to your federal return. Some tax preparation services can help you file both at the same time.
Free Tax Preparation Resources for SSDI Recipients
If your income is below a certain level—usually around $60,000 per year—you may be able to file your taxes for free through the IRS Volunteer Income Tax information (VITA) program. VITA sites are run by nonprofits and community organizations and offer free tax return preparation and filing.
To find a VITA site near you, visit the IRS website (irs.gov) and use the VITA locator tool, or call 211 to ask for a referral. VITA services are available during tax season, typically from January through April. You will need to bring documents including your Social Security card, photo ID, and any forms you received (such as 1099s or W-2s).
If you cannot reach a VITA site or prefer to file online, the IRS also maintains a list of free tax software providers through its Free File program. These providers offer free federal tax return filing if your income is below a certain threshold. Some also offer free state return filing.
What Happens If You Do Not File When You Should
If you owe taxes and do not file, the IRS can assess penalties and interest on the amount owed. However, if you do not owe taxes and straightforward did not file, there is no penalty. The risk comes if you had taxes withheld or are owed a refund—in that case, you lose money by not filing, because the IRS keeps the refund after three years.
If you are unsure whether you owe taxes, it is safer to file. Filing a return when you do not owe anything costs nothing and takes a few hours. Not filing when you do owe can result in penalties that grow over time. If you have already missed a filing important date, you can still file a late return and claim any refund you are owed, though you may face a small penalty if you also owe taxes.
Frequently Asked Questions
Can I work part-time and still receive SSDI without losing my benefits?
Yes, but there are limits. SSDI has a trial work period that allows you to test your ability to work without losing benefits. After that, you can earn up to a certain amount per month (called substantial gainful activity, or SGA) without losing benefits. However, earning above that limit can result in benefit suspension or termination. You should report all work income to Social Security and consult with a work incentives counselor before taking a job.
If I receive both SSDI and SSI, do I have to file taxes?
SSI (Supplemental Security Income) is not counted as income for tax purposes, but SSDI is. If you receive both, you follow the same rules as someone receiving SSDI alone. However, any wages you earn count toward both programs' income limits, so you should report all income to Social Security to avoid overpayment.
What if I did not file taxes in previous years when I should have?
You can file back returns for prior years. The IRS generally allows you to claim a refund for up to three years of prior returns. If you owe taxes from prior years, filing late will result in penalties and interest, but filing is still better than not filing. Consider consulting a tax professional or contacting VITA for help with multiple years of returns.
Does filing taxes affect my SSDI benefits or my Medicare coverage?
Filing a tax return does not affect your SSDI benefits or your Medicare coverage. Social Security and the IRS are separate agencies. However, you must report any work income to Social Security, because earnings can affect your benefits. Tax filing and income reporting to Social Security are two different things.
What documents do I need to file taxes on SSDI?
You will need your Social Security number, proof of identity, and any forms you received from employers or financial institutions (such as W-2s, 1099s, or 1098s). You should also have records of any deductible expenses if you are self-employed. If you use a tax preparer or VITA, they will tell you what specific documents to bring.