You may not have to report SSDI on your federal tax return, even though some of it counts as income for tax purposes

The short answer: most people who receive only SSDI do not report it on their tax return because their income falls below the threshold where reporting is required. But if you have other income—wages, self-employment earnings, interest, or dividends—you may have to report SSDI even if you would not have to report the other income alone.

The rule is complicated because the IRS counts SSDI differently than SSA does. For Social Security purposes, SSDI is a benefit. For tax purposes, up to 85 percent of your SSDI can be treated as taxable income, depending on your total income from all sources. Whether you actually owe tax on it depends on whether your "combined income" exceeds a specific threshold.

The IRS publishes a worksheet each year to calculate combined income and determine how much SSDI is taxable. You do not have to do this calculation yourself unless you file a return, but understanding how it works helps you know whether you need to file.

Key Takeaways

  • If SSDI is your only income and you are single, you do not have to file a federal tax return unless your SSDI exceeds roughly $12,550 per year (the standard deduction for 2023; this amount changes annually).
  • If you have wages, self-employment income, or investment income in addition to SSDI, you must file a return even if that other income alone would not require one.
  • The IRS counts up to 85 percent of your SSDI as taxable income when calculating whether you owe tax, using a formula based on your "combined income" (SSDI plus adjusted gross income plus tax-exempt interest).
  • You can request that the Social Security Administration withhold federal income tax from your SSDI payments if you expect to owe tax, which simplifies filing and avoids underpayment penalties.
  • Filing a return even when you do not owe tax can result in a refund if taxes were withheld or if you are may have access to to credits like the Earned Income Tax Credit.

When SSDI alone does not require you to file

If SSDI is your only source of income, the filing requirement depends on whether your annual SSDI payment exceeds the standard deduction for your filing status. For 2023, the standard deduction was $13,850 for single filers and $27,700 for married couples filing jointly. These amounts increase each year for inflation.

The average SSDI payment in 2023 was roughly $1,550 per month, or about $18,600 per year. This means many SSDI recipients exceed the standard deduction and would normally have to file. However, because SSDI is only partially taxable (up to 85 percent), your actual taxable income may be lower than your gross SSDI payment. The IRS worksheet accounts for this.

If you are unsure whether your SSDI alone puts you over the threshold, you can use the IRS Interactive Tax Assistant tool on irs.gov, which walks you through the calculation. You can also contact the IRS directly at 1-800-829-1040.

How other income changes the filing requirement

The moment you have income from any other source—even a small amount—the calculation shifts. Wages, self-employment income, interest, dividends, rental income, and certain other sources all count toward your combined income for tax purposes.

If you earned $500 in wages and received $18,000 in SSDI, you would have to file a return even though neither source alone would require it. The IRS uses your combined income to determine how much of your SSDI is taxable. The more other income you have, the more of your SSDI becomes taxable, up to the 85 percent cap.

This is why people who work part-time while on SSDI often end up filing returns. The work incentive programs—like the Trial Work Period or Extended may be able to access Period—allow you to earn wages without losing SSDI, but those wages trigger a tax filing requirement.

How the IRS calculates taxable SSDI

The IRS uses a two-tier formula to determine how much SSDI is taxable. The first tier applies if your combined income is between $25,000 and $34,000 (single) or $32,000 and $44,000 (married filing jointly). The second tier applies if your combined income exceeds those amounts.

Combined income is defined as your adjusted gross income plus any tax-exempt interest plus half of your SSDI. This is not the same as your total income. For example, if you earned $20,000 in wages and received $18,000 in SSDI, your combined income would be $20,000 plus half of $18,000, or $29,000.

At $29,000 combined income, you would fall into the first tier. The IRS would count 50 percent of the amount by which your combined income exceeds $25,000 as taxable SSDI, plus 85 percent of any amount above the second threshold. In this example, that would be 50 percent of $4,000, or $2,000 of your SSDI counted as taxable income.

The exact calculation is complex, which is why the IRS publishes a detailed worksheet in Publication 915 each year. If you file a return, your tax software or a tax preparer will do this calculation for you.

Withholding taxes from your SSDI payments

If you know you will owe federal income tax because of SSDI plus other income, you can ask the Social Security Administration to withhold federal income tax directly from your monthly SSDI payment. This is done using Form W-4V, which you submit to SSA.

You can choose to withhold 7 percent, 10 percent, 12 percent, or 22 percent of your monthly payment. This reduces the amount you receive each month but ensures that tax is paid throughout the year, which can prevent underpayment penalties and may result in a refund when you file.

To request withholding, you can submit Form W-4V online through your my Social Security account, by mail, or in person at your local Social Security office. You can change or stop withholding at any time.

When you should file even if you do not owe tax

Even if your income is below the filing threshold and you do not owe federal income tax, you may want to file a return. If your employer withheld federal income tax from wages, or if you had tax withheld from your SSDI, filing a return may result in a refund of that withheld amount.

You may also be may have access to to refundable tax credits that require you to file to claim them. The Earned Income Tax Credit (EITC), for example, is available to people with low income who work, and it can result in a refund even if you owe no tax. The Additional Child Tax Credit is another refundable credit that requires filing.

If you are unsure whether filing would benefit you, a free tax preparation service can review your situation. The IRS Volunteer Income Tax information (VITA) program offers free tax preparation to people with low to moderate income. You can find a VITA site near you on the IRS website.

State income tax and SSDI

Federal tax rules do not explore to state income tax. Some states do not tax SSDI at all. Others tax it the same way the federal government does. A few states have their own rules that differ from federal treatment.

If you live in a state with an income tax, contact your state tax authority or check your state's tax website to learn how SSDI is treated. You may be required to file a state return even if you do not have to file federally, or you may not have to file a state return even if you file federally.

States that do not tax SSDI include Illinois, Mississippi, and Pennsylvania. States that follow federal rules include California, New York, and most others. A few states have partial exemptions or special rules for people over a certain age or with certain income levels.

What to do if you have not filed in past years

If you did not file a return in a year when you should have, you can still file a late return. The IRS generally does not penalize you for filing late if you are owed a refund, because there is no tax owed—only money to be returned to you.

You can file returns for the past three years to claim refunds. If you are owed a refund from a year more than three years ago, that money is generally forfeited. If you owe tax from a past year, filing late may result in penalties and interest, but filing is still the right step.

If you are unsure whether you should have filed in a past year, a tax preparer or VITA volunteer can review your income from that year and advise you. You can also call the IRS at 1-800-829-1040.

Frequently Asked Questions

Do I have to report SSDI if it is my only income?

Only if your SSDI exceeds the standard deduction for your filing status (roughly $13,850 for single filers in 2023, adjusted annually for inflation). Most SSDI recipients do exceed this threshold, but because SSDI is only partially taxable, your actual tax liability may be zero even if you must file.

What if I work part-time and receive SSDI?

You must file a return because your combined income (wages plus SSDI) determines how much of your SSDI is taxable. Work incentive programs allow you to earn without losing SSDI, but the wages trigger a filing requirement. Your tax software will calculate how much SSDI becomes taxable based on your total income.

Can I request that SSA withhold taxes from my SSDI?

Yes, using Form W-4V. You can choose to withhold 7, 10, 12, or 22 percent of your monthly payment. Submit the form through your my Social Security account, by mail, or at your local Social Security office. You can change or stop withholding anytime.

Will filing a return affect my SSDI benefits?

No. Filing a tax return does not change your SSDI payment or your benefit status. The IRS and SSA are separate agencies. Your SSDI amount is based on your work history and disability status, not on your tax filing or tax liability.

What if I owe tax on my SSDI?

You can pay the tax when you file your return, or you can request withholding from your SSDI payments using Form W-4V to spread the payment across the year. If you cannot pay in full, the IRS offers payment plans. Contact the IRS or a tax preparer to discuss your options.