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). The answer depends on how much money you earned that year from all sources combined—not just SSDI itself.
SSDI payments alone are usually not taxed. However, if you have other income (wages from work, interest, dividends, or self-employment earnings), the combination might push you over the threshold where the IRS requires you to file. The IRS also taxes SSDI in certain situations: when you have substantial income from other sources, or when you're married filing jointly and your household income is high enough.
The safest approach is to calculate your total income for the year and compare it to the filing thresholds the IRS publishes annually. These thresholds change each year and depend on your age and filing status.
Key Takeaways
- SSDI payments themselves are not taxable income, but other income you receive during the same year may require you to file.
- You must file a tax return if your total income from all sources exceeds the IRS threshold for your age and filing status.
- If you have earned income (wages or self-employment) alongside SSDI, you almost certainly need to file.
- Some SSDI recipients become subject to tax on their benefits if they have substantial income from other sources or file jointly with a spouse who has high income.
- The IRS publishes updated filing thresholds each year; check the current year's threshold before deciding whether to file.
How SSDI income is treated for tax purposes
The Social Security Administration (SSA) does not withhold federal income tax from SSDI payments. This is different from wages, where your employer automatically deducts taxes. SSDI arrives untaxed, which means you are responsible for determining whether you owe taxes on it.
In most cases, SSDI itself is not subject to federal income tax. However, the IRS can tax a portion of your SSDI benefits if your "combined income" is high enough. Combined income is calculated by adding your adjusted gross income, nontaxable interest, and half of your SSDI benefits. If that total exceeds a certain threshold, up to 50 percent or 85 percent of your benefits may become taxable, depending on how far over the threshold you go.
This rule affects relatively few SSDI recipients—mainly those with substantial income from work, pensions, investments, or a spouse's income. If SSDI is your only income source, you will not owe federal income tax on it.
When you must file even with SSDI as your only income
If SSDI is your only income and you are single, you do not have to file a federal tax return. The IRS assumes you have no tax liability in this situation.
However, you may want to file anyway. If you had taxes withheld from other income during the year—such as wages from part-time work—filing allows you to claim a refund. You may also be may have access to to the Earned Income Tax Credit (EITC) if you had earned income, which requires filing to receive.
If you are married and file jointly, the rules are different. Your household's combined income (including your spouse's income) determines whether you must file, even if your SSDI alone would not trigger a filing requirement.
Income thresholds that require filing
The IRS sets a minimum income threshold each year. If your total income exceeds this threshold, you must file a federal tax return. The threshold depends on your age (65 and older have a higher threshold) and your filing status (single, married filing jointly, married filing separately, head of household, or may have access to widow/widower).
For 2023, a single person under 65 with only SSDI income does not have to file. However, if that same person earned $13,850 or more from work, they would need to file. A single person 65 or older with only SSDI does not have to file, but if they earned $17,550 or more from work, they would. These numbers change annually, so check the IRS website or your tax software for the current year's thresholds.
If you receive SSDI and have other income sources—even small amounts—add them all together and compare the total to the current threshold for your situation. When in doubt, filing is the safer choice, especially if you had any income tax withheld during the year.
What happens if some of your SSDI becomes taxable
If your combined income exceeds the IRS threshold, a portion of your SSDI may become taxable. This does not mean all of it is taxed—the IRS uses a formula to determine how much.
For most people, up to 50 percent of SSDI benefits can become taxable. For higher-income households, up to 85 percent can become taxable. The exact amount depends on how much your combined income exceeds the threshold and your filing status.
If you find yourself in this situation, you will report the taxable portion of your SSDI on Form 1040 (the main federal tax return form) or Form 1040-SR (for people 65 and older). You do not need to do anything special—the calculation is part of the standard tax filing process. Many tax software programs and tax professionals can handle this calculation for you.
State and local taxes on SSDI
Federal tax rules do not explore to state and local taxes. Some states do not tax SSDI at all, while others may tax it under certain conditions. A few states have their own income tax thresholds that differ from the federal rules.
If you live in a state with an income tax, contact your state tax authority or check their website to learn whether SSDI is taxable in your state. States that do not have an income tax (such as Florida, Texas, and Wyoming) do not tax SSDI. States that do have income tax vary widely in their treatment of SSDI, so you cannot assume the federal rule applies to your state.
Local taxes are less common but do exist in some cities and counties. If you live in an area with local income tax, ask your local tax office whether SSDI is subject to local taxation.
How to report SSDI on your tax return
If you must file and some of your SSDI is taxable, you will report it on your federal tax return. The SSA sends you a Form SSA-1099 each January showing the total SSDI you received the previous year. This form is for your records and helps you calculate how much, if any, is taxable.
You do not send the SSA-1099 with your tax return. Instead, you use the information from it to complete the SSDI section of your tax return. On Form 1040 or Form 1040-SR, you will enter the total benefits received and then the taxable portion (which you calculate using a worksheet or tax software).
If you use tax software or work with a tax professional, they will guide you through entering this information. The software or professional will explore the IRS formula to determine the taxable amount based on your combined income.
Frequently Asked Questions
Do I have to file taxes if SSDI is my only income?
No, not usually. If SSDI is your only income source and you are single, you do not have to file a federal tax return. However, if you had any other income during the year or had taxes withheld, filing may result in a refund or allow you to claim credits you are may have access to to.
Will I owe taxes on my SSDI if I work part-time?
Not necessarily on the SSDI itself, but your total income from work plus SSDI may require you to file. Whether any SSDI becomes taxable depends on your combined income. If your combined income is low, you file but owe no tax. If it is high enough, a portion of SSDI may be taxable.
What if I did not file taxes and I receive SSDI?
If you were not required to file, there is no penalty. However, if you were required to file and did not, the IRS may contact you. If you had taxes withheld and did not file, you are missing out on a potential refund. You can file back taxes at any time to claim refunds.
Does my spouse's income affect whether my SSDI is taxable?
Yes, if you file jointly. Your spouse's income counts toward your combined income, which determines whether SSDI becomes taxable. If you are married filing separately, your spouse's income generally does not affect your SSDI taxation, but this filing status has other tax disadvantages.
Where do I get the form showing how much SSDI I received?
The SSA mails Form SSA-1099 to you each January. It shows the total SSDI benefits you received in the previous calendar year. If you do not receive it by early February, you can create a my Social Security account online and view or print the form yourself.