The short answer: it depends on your total income
You may have to report some or all of your SSDI benefits on your federal tax return, but most people who receive only SSDI do not. The rule hinges on your combined income—a specific calculation that includes your SSDI, wages, interest, and other money you received during the year. If your combined income stays below a certain threshold, you owe nothing on your SSDI. If it crosses that line, a portion of your benefits becomes taxable.
The thresholds are low and have not changed since 1984, so even modest outside income can push you over. This is why many people with SSDI and a part-time job, or SSDI and a pension, end up owing tax on their benefits.
Key Takeaways
- If SSDI is your only income, you almost certainly do not have to report it on your tax return.
- Combined income is calculated by adding your SSDI to all other income, including wages, interest, and pensions, then subtracting certain deductions.
- The threshold for single filers is $25,000; for married filing jointly it is $32,000; these limits have not changed since 1984.
- If you cross the threshold, you report the taxable portion of your SSDI on Form 1040 using a worksheet the IRS provides.
- The Social Security Administration sends Form SSA-1099 in January, which shows your SSDI for the year and helps you calculate what you owe.
How combined income is calculated
Combined income is not the same as your gross income. The IRS starts with your adjusted gross income (AGI)—wages, self-employment income, interest, dividends, and other earnings—then adds back certain deductions and adds your SSDI in full. The result is your combined income for the purpose of determining whether your SSDI is taxable.
For example: you earn $20,000 from a job and receive $15,000 in SSDI. Your combined income is $35,000. You are over the $25,000 threshold for single filers, so part of your SSDI is taxable. If you had earned only $5,000, your combined income would be $20,000, and you would owe nothing on your SSDI.
The calculation also includes tax-exempt interest (interest from municipal bonds, for instance), which most people do not have. If you do, it counts toward combined income even though it is not taxable income otherwise. Pensions, rental income, and capital gains all count too.
The income thresholds and how they work
The IRS uses two thresholds. If your combined income is below the first threshold, none of your SSDI is taxable. If it is above the first threshold but below the second, up to 50 percent of your benefits may be taxable. If it is above the second threshold, up to 85 percent may be taxable.
| Filing Status | First Threshold | Second Threshold |
|---|---|---|
| Single | $25,000 | $34,000 |
| Married filing jointly | $32,000 | $44,000 |
| Married filing separately | $0 | $0 |
If you are married and file separately, a different rule applies: you must report at least some of your SSDI as taxable income unless you lived apart from your spouse for the entire year. This is one reason married couples often file jointly even when one spouse has little income.
These thresholds have remained unchanged since 1984. They are not adjusted for inflation, which means that over time, more people with modest incomes have crossed them. A part-time job that pays $15,000 a year, combined with $15,000 in SSDI, puts you over the threshold for single filers.
How to calculate the taxable portion
If your combined income exceeds the first threshold, the IRS provides a worksheet to calculate exactly how much of your SSDI is taxable. You will find it in the instructions for Form 1040 (the main federal income tax form) under "Social Security Benefits". The worksheet walks you through the calculation step by step.
The math is not intuitive—it involves comparing your combined income to the thresholds and explore a formula that caps the taxable amount at either 50 or 85 percent of your benefits, depending on which threshold you crossed. Most people use tax software or a tax preparer to do this correctly, because a mistake can trigger an audit or delay your refund.
You do not calculate this on your own and send it to the IRS. Instead, you report the result on Form 1040, line 5b, as part of your total income. The Social Security Administration and the IRS coordinate, so if you report it correctly, the numbers should match what the IRS expects to see.
What form the Social Security Administration sends you
In January of each year, the Social Security Administration mails Form SSA-1099 to every person who received SSDI during the previous year. This form shows the total amount of SSDI you received in box 5. You use this number to calculate your combined income and determine whether any of your benefits are taxable.
Keep this form with your tax records. If you file electronically, you do not need to mail it to the IRS, but you should have it on hand in case the IRS asks questions later. If you file on paper, you do not attach it to your return, but you do use the information on it.
If you did not receive Form SSA-1099 by early February, contact the Social Security Administration at 1-800-772-1213 or visit your local Social Security office. You will need the form to file your return accurately.
When you do not have to file a return at all
Even if you received SSDI, you may not have to file a federal income tax return at all. The IRS sets a filing threshold based on your age and filing status. For 2023, a single person under 65 with no dependents does not have to file unless their gross income was $13,850 or more. For someone 65 or older, the threshold is higher.
SSDI itself does not count toward this threshold—only wages, self-employment income, interest, dividends, and other taxable income do. So if you earned $10,000 from a job and received $20,000 in SSDI, your gross income for filing purposes is $10,000, and you do not have to file.
However, if you had taxes withheld from wages or other income, you may want to file anyway to get a refund. And if you are married and your spouse works, you may need to file jointly even if you individually would not have to.
What happens if you do not report taxable SSDI
If your combined income is above the threshold and you do not report the taxable portion of your SSDI, the IRS will eventually notice. The Social Security Administration reports all SSDI payments to the IRS, so the agency knows what you received. If your return does not include the taxable amount, you will receive a notice asking you to explain the discrepancy or pay the tax owed plus interest and penalties.
The penalty for underpaying tax is usually 20 percent of the unpaid amount, plus interest that compounds daily. Over several years, this can add up quickly. It is far cheaper to report the income correctly the first time, even if it means owing a small amount of tax.
If you realize you made a mistake on a prior year return, you can file an amended return using Form 1040-X. The IRS generally allows you to amend returns going back three years.
Frequently Asked Questions
If I work part-time and receive SSDI, do I have to report both on my taxes?
Yes. Your wages are always taxable income. Whether your SSDI is taxable depends on your combined income—wages plus SSDI plus any other income. If the total crosses the threshold for your filing status, part of your SSDI becomes taxable and you report it on Form 1040.
Does my SSDI count as income for other government programs?
Not always. SSDI is not counted as income for Medicaid or Supplemental Security Income (SSI), which is a different program. It may count for other means-tested programs like SNAP or housing information. Contact the specific program to ask how they treat SSDI.
What if I receive both SSDI and a pension?
Both count toward your combined income. If your SSDI plus your pension plus any other income exceeds the threshold, part of your SSDI is taxable. Pensions are always taxable income, so you will owe tax on the pension itself regardless of the SSDI calculation.
Can I reduce my taxable SSDI by making charitable donations?
No. Charitable donations reduce your taxable income, but they do not reduce your combined income for the purpose of determining whether SSDI is taxable. The SSDI calculation happens first, before deductions are applied.
Do I have to pay estimated taxes if I know my SSDI will be taxable?
Only if you owe more than $1,000 in tax for the year. If you owe less, you can pay the full amount when you file your return. If you owe more, the IRS may charge a penalty for underpayment unless you paid estimated taxes quarterly or had taxes withheld from wages.