Report SSDI on Form 1040 if you have other income

You report Social Security Disability Insurance (SSDI) on your federal tax return only if you have other income that pushes your total above a threshold. The IRS calls this the "combined income" test. Combined income is the sum of your adjusted gross income, nontaxable interest, and one half of your SSDI benefits.

If your combined income exceeds $25,000 (single filer) or $32,000 (married filing jointly), you must include a portion of your SSDI in taxable income. The portion is never more than 85 percent of your benefits, and often much less. If your combined income is below those thresholds, you owe nothing on your SSDI, even if you file a return for other reasons.

The calculation itself is done on Worksheet 1 or Worksheet 2 in the instructions to Form 1040, depending on whether you have nontaxable interest. The IRS publishes these worksheets every year with the Form 1040 package. You do not file the worksheet itself — you use it to figure the taxable amount, then enter that amount on line 5b of Form 1040.

Key Takeaways

  • SSDI is taxable only if your combined income (wages, interest, half your SSDI) exceeds $25,000 single or $32,000 married filing jointly.
  • You calculate the taxable portion using Worksheet 1 or 2 in the Form 1040 instructions, not by filing a separate form.
  • Social Security sends you a Form SSA-1099 each January showing your total SSDI for the prior year; use this figure in the worksheet.
  • If SSDI is your only income, you typically owe no federal tax and may not need to file, but filing can recover withheld taxes or claim the Earned Income Tax Credit if you have other may have access to income.
  • State tax treatment of SSDI varies; some states tax it, others do not, regardless of federal rules.

Understanding combined income and the threshold

The threshold exists because Congress wanted to tax SSDI only for people with substantial other income. A person living on SSDI alone pays no federal tax on it. But if you have wages, self-employment income, pension income, or investment income, those dollars count toward the threshold.

The formula is: adjusted gross income + nontaxable interest + (one half of SSDI) = combined income. Nontaxable interest includes municipal bond interest and interest on U.S. savings bonds used for education. If you have none, you skip that part. The half of SSDI is always included in the calculation, even though it is not itself income.

Example: You receive $15,000 in SSDI and earn $12,000 in wages. Your combined income is $12,000 + $0 + $7,500 = $19,500. You are below the $25,000 threshold, so none of your SSDI is taxable. If instead you earned $15,000 in wages, your combined income would be $15,000 + $0 + $7,500 = $22,500, still below the threshold. But if you earned $18,000, your combined income would be $25,500, and you would owe tax on a portion of your SSDI.

Where to find your SSDI amount: Form SSA-1099

Social Security mails Form SSA-1099 to you by January 31 each year. This form shows the total SSDI you received in the prior calendar year. The amount appears in box 5. If you did not receive a Form SSA-1099, call Social Security at 1-800-772-1213 and request one, or create an account at ssa.gov and view it online.

Do not estimate your SSDI amount. Use the exact figure from box 5 of the Form SSA-1099. If you received benefits for only part of the year, or if your benefit amount changed during the year, the form reflects that. If you received a retroactive payment (a lump sum for months you were not yet receiving), it all counts in the year you received it, not the year it covered.

Keep your Form SSA-1099 with your tax records. If you file electronically, you do not mail it, but the IRS can request it later if your return is audited.

Calculating taxable SSDI using the IRS worksheet

The IRS provides two worksheets in the Form 1040 instructions. Worksheet 1 applies if you have no nontaxable interest. Worksheet 2 applies if you do. Both follow the same logic but Worksheet 2 has an extra line.

The worksheet asks you to enter your combined income, then compare it to the first threshold ($25,000 single, $32,000 married filing jointly). If combined income is below the threshold, the taxable portion is zero and you stop. If it exceeds the threshold, you calculate 50 percent of the excess, then compare that to 50 percent of your total SSDI. The smaller of the two is your taxable amount — but it never exceeds 85 percent of your total SSDI.

Example: You are single, receive $18,000 in SSDI, earn $20,000 in wages, and have no other income. Combined income is $20,000 + $0 + $9,000 = $29,000. The excess over $25,000 is $4,000. Half of that is $2,000. Half of your SSDI is $9,000. The smaller amount is $2,000, so $2,000 of your SSDI is taxable. You enter $2,000 on line 5b of Form 1040.

The worksheet is included free with the Form 1040 package each year. You can also read it from irs.gov or request it by phone. Many tax software programs calculate this automatically if you enter your SSDI amount and other income.

Filing requirements when SSDI is your only income

If SSDI is your only income and it is below the filing threshold for your age and filing status, you are not required to file a federal return. The IRS does not require a return from a single person under 65 with less than $13,850 in gross income for 2023 (the threshold is higher for those 65 and older, and for married filers). SSDI counts as gross income for this purpose.

However, you may want to file anyway. If your employer withheld federal income tax from wages you earned earlier in the year, filing a return can recover that money as a refund. If you have a child and earned income, you may be able to claim the Earned Income Tax Credit, which can result in a refund even if you owe no tax. If you received a stimulus payment or tax credit in a prior year and need to reconcile it, filing is necessary.

To file, use Form 1040 (the main return), not a simplified form. Attach your Form SSA-1099. If no portion of your SSDI is taxable, leave line 5b blank or enter zero. Mail the return to the address shown in the Form 1040 instructions, or file electronically using free software through IRS Free File if your income qualifies.

State income tax and SSDI

Federal tax rules do not bind the states. Some states do not tax SSDI at all. Others tax it under the same rules as the federal government. A few tax it differently — for example, taxing it only if your total income exceeds a different threshold, or taxing a different percentage.

Check your state's department of revenue website or call your state tax office to learn the rule for your state. If your state taxes SSDI, you will report it on your state return using a similar combined-income calculation, though the thresholds and percentages may differ. Some states provide a worksheet in their return instructions; others direct you to use the federal worksheet and explore the state threshold.

If you live in a state with no income tax (such as Florida, Texas, or Wyoming), you owe no state tax on SSDI. If you moved during the year, you may owe tax to two states; file a part-year resident return in each.

What to do if you cannot complete the worksheet

If the worksheet confuses you, several resources can help. The IRS publishes Publication 915, which explains SSDI taxation in detail with examples. You can read it free from irs.gov or request it by phone at 1-800-829-3676. Many public libraries offer free tax preparation help through the Volunteer Income Tax information (VITA) program, which serves people with low to moderate income. Find a VITA site near you at irs.gov/vita.

A tax professional — a CPA, enrolled agent, or tax preparer — can also complete the calculation for you. Fees vary, but many preparers charge $100 to $300 for a straightforward return with SSDI. Some offer free or low-cost preparation if your income is below a certain level. Ask whether they have experience with SSDI before you hire them.

Do not ignore the calculation or guess. If you underreport taxable SSDI, the IRS may assess back taxes, penalties, and interest. If you overreport it, you will pay more tax than you owe. Taking the time to use the worksheet or get help is worth the effort.

Frequently Asked Questions

Do I have to file a tax return if I only receive SSDI?

No, if SSDI is your only income and it is below the filing threshold for your age and filing status (roughly $13,850 for a single person under 65 in 2023). However, you should file if you had taxes withheld from other income during the year, or if you have a child and earned income that qualifies you for the Earned Income Tax Credit.

What if I received a retroactive SSDI payment?

A lump-sum retroactive payment counts as income in the year you received it, not the years it covered. This can push your combined income over the threshold in that year and make some SSDI taxable, even if you would not normally owe tax. Your Form SSA-1099 will show the full amount received.

Can I deduct my medical expenses related to my disability?

Only if your total medical expenses exceed 7.5 percent of your adjusted gross income, and only if you itemize deductions instead of taking the standard deduction. SSDI itself is not deductible. Consult a tax professional to see whether itemizing benefits you.

What if I disagree with the amount on my Form SSA-1099?

Contact Social Security when ready at 1-800-772-1213 or visit your local Social Security office. Bring your payment records or bank statements showing deposits. Social Security can issue a corrected Form SSA-1099 if an error is found. Do not file your tax return until the discrepancy is resolved.

Do I need to report SSDI on my state return if my state does not tax it?

No. If your state does not tax SSDI, you do not report it on your state return. However, you still report it on your federal return if your combined income exceeds the federal threshold. Check your state's rules to confirm whether SSDI is taxable in your state.