Whether you have to file taxes on SSDI depends on your total income, not just your benefits

Social Security Disability Insurance (SSDI) itself is not taxed as income. However, you may still owe federal income taxes if your total income from all sources exceeds a certain threshold. The IRS looks at your combined income—which includes wages, interest, dividends, and part of your SSDI—to decide whether filing is required. Many people on SSDI have no tax filing obligation. Others do, even though their SSDI payments themselves are not taxed.

The key is understanding what counts as "income" for tax purposes. If you work while receiving SSDI, those wages count. If you have a spouse and file jointly, their income counts too. If you receive other benefits like Supplemental Security Income (SSI) or veterans' benefits, those factor in as well. The IRS has specific formulas to determine your "combined income," and that number—not your SSDI amount alone—determines whether you file.

Key Takeaways

  • SSDI payments themselves are never taxed, but you may owe taxes on other income you receive while on SSDI.
  • You must file taxes if your combined income (wages, interest, and part of your SSDI) exceeds the threshold set by the IRS, which varies by filing status and age.
  • If you work and earn wages, you almost certainly must file, even if your SSDI is your main source of income.
  • Filing taxes when you owe nothing can sometimes benefit you by securing refundable tax credits like the Earned Income Tax Credit (EITC).
  • The Social Security Administration sends Form SSA-1099 each January showing your SSDI payments, which you need to complete your tax return.

How the IRS calculates whether you must file

The IRS uses a formula called combined income to determine your tax filing requirement. Combined income includes your adjusted gross income plus nontaxable interest plus half of your SSDI benefits. If this number exceeds a threshold amount, you must file. The threshold depends on your filing status (single, married filing jointly, married filing separately, head of household) and your age (whether you are 65 or older).

For example, if you are single and under 65, your threshold is $13,850 for 2023. If you are single and 65 or older, it is $17,550. If you are married filing jointly and both spouses are under 65, it is $27,700. These amounts change each year. The IRS publishes updated thresholds in January, and you can find them on the IRS website or by calling 1-800-829-1040.

To calculate your combined income, start with your wages or other earned income. Add any interest or dividends. Then add half of your SSDI benefits. If that total exceeds your threshold, you must file a federal income tax return, even if you do not owe any taxes.

When you work and receive SSDI at the same time

If you earn wages while on SSDI, you almost certainly must file taxes. Wages are counted in full toward your combined income calculation, and they push most people over the filing threshold. This is true even if your wages are modest and your SSDI is your primary income source.

Additionally, SSDI has its own earnings rules separate from taxes. If you work and earn above a certain amount (called the substantial gainful activity level), the Social Security Administration may reduce or stop your SSDI payments. For 2024, that limit is $1,550 per month. This is a separate issue from taxes, but it matters: you could owe taxes on your wages and also lose SSDI benefits if you earn too much. The Social Security Administration and the IRS track these separately, so you need to understand both rules.

If you are in a trial work period or using a work incentive like Impairment Related Work Expenses (IRWE), keep detailed records of your earnings and work-related costs. These can affect both your tax filing requirement and your SSDI payment amount.

SSDI and refundable tax credits

Even if you do not owe taxes, filing a return can put money in your pocket through refundable tax credits. The most common is the Earned Income Tax Credit (EITC), which is designed for people with low to moderate earned income. If you work while on SSDI and your income is low enough, you may receive an EITC refund—money the government sends you—even if you owe no taxes.

To claim the EITC, you must file a tax return. You cannot receive the credit without filing. The credit amount depends on your earned income, filing status, and whether you have dependents. For 2023, the maximum EITC for a single person with no dependents was $560. For a person with one may have access to child, it was $3,995. These amounts change yearly.

Other refundable credits may also explore to you, such as the Child Tax Credit or the American Opportunity Tax Credit if you or a dependent are in school. A tax professional or free tax preparation service can help you determine which credits you may have access to for.

What documents you need to file taxes on SSDI

Each January, the Social Security Administration mails Form SSA-1099 to everyone who received SSDI during the previous year. This form shows the total SSDI benefits you received. You need this form to complete your federal tax return. If you do not receive it by early February, contact Social Security at 1-800-772-1213 or visit your local Social Security office.

If you worked during the year, your employer will send you Form W-2, which reports your wages and taxes withheld. If you received interest or dividends, you will receive Form 1099-INT or Form 1099-DIV. Gather all these forms before you file. You will need them to complete your return accurately.

If you are married and file jointly, you will also need your spouse's income information and any forms they received. If you have dependents, gather their Social Security numbers and information about any income they earned.

Filing your taxes when you receive SSDI

You can file your federal tax return using tax software, a tax professional, or free tax preparation services. The IRS Free File program offers free tax software to people who earn below a certain income threshold (usually around $60,000). You can find participating providers on the IRS website at IRS.gov/freefile.

If you prefer in-person help, the Volunteer Income Tax information (VITA) program offers free tax preparation at libraries, community centers, and other locations. To find a VITA site near you, visit the IRS website or call 211. VITA volunteers are trained to handle SSDI cases and can answer questions about how your benefits affect your taxes.

When you file, report your SSDI income on line 5b of Form 1040 (the main federal tax form). Your tax software will guide you through this. If you owe taxes, you can pay by check, electronic transfer, or credit card. If you are owed a refund, you can have it deposited directly into your bank account, which is usually faster than waiting for a check.

State income taxes and SSDI

Most states do not tax SSDI benefits, but a few do. The states that tax SSDI are Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont. If you live in one of these states and your income exceeds your state's filing threshold, you must file a state income tax return as well as a federal one.

State filing thresholds and rules differ from federal rules. Some states have higher thresholds; others have lower ones. Contact your state's tax agency or visit its website to learn the specific rules for your situation. Many state tax agencies have toll-free numbers and online resources similar to the IRS.

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 you owe. The failure-to-file penalty is typically 5 percent of unpaid taxes for each month your return is late, up to 25 percent. Interest accrues daily on unpaid taxes. These charges add up quickly, so filing on time—even if you cannot pay when ready—is important.

If you do not owe taxes but do not file, there is no penalty. However, if you are owed a refund, you have a limited time to claim it. The IRS generally allows three years to file and claim a refund. After that, the money goes to the U.S. Treasury. If you think you are owed a refund, file as soon as you can.

If you have not filed in previous years and think you may owe taxes, contact a tax professional or the IRS. The IRS has programs to help people catch up on unfiled returns, and filing late is better than not filing at all.

Frequently Asked Questions

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

No, not usually. If SSDI is your only income and you are under 65, you do not have to file unless your combined income exceeds $13,850 (for 2023). If you are 65 or older, the threshold is $17,550. However, filing may still benefit you if you are may have access to to a refundable tax credit.

What if I earned wages for only part of the year?

You still must file if your combined income (wages plus half your SSDI) exceeds your threshold. Even a few months of wages can push you over the limit. Report only the wages you actually earned on your tax return.

Can the IRS take my SSDI payments to pay back taxes?

Generally, no. SSDI is protected from most creditors and from the IRS. However, there are narrow exceptions for unpaid federal taxes, federal student loans, and child support or alimony owed. If you owe back taxes, contact the IRS to discuss payment options before the agency pursues collection.

If I file taxes, will it affect my SSDI benefits?

Filing a tax return does not affect your SSDI benefits. SSDI is based on your work history and disability, not on your income or tax filing. However, if you earn wages that exceed the substantial gainful activity limit, that can affect your benefits—but that is separate from taxes.

Where can I get free help filing taxes on SSDI?

The IRS Free File program and VITA (Volunteer Income Tax information) both offer free tax preparation. You can also contact your local Social Security office for referrals to tax help in your area. Some disability organizations and nonprofits also offer free tax information to people on SSDI.