What the 2016 tax year meant for SSDI recipients

In 2016, the rules for whether you owed federal income tax on your SSDI benefits were the same as they are now: it depended on your total income, not on the SSDI amount alone. The Social Security Administration did not change the taxation formula that year, and the income thresholds that determine whether benefits are taxable stayed at the levels set in 1983.

If you received SSDI in 2016 and are now looking back at that tax year — whether because you did not file, lost your records, or are working with a tax professional on amended returns — you need to know what your "combined income" was. That figure, not your SSDI payment, determines the tax outcome.

Key Takeaways

  • In 2016, SSDI was taxable only if your combined income (adjusted gross income plus nontaxable interest plus half your SSDI) exceeded $25,000 for single filers or $32,000 for married filing jointly.
  • The income thresholds in 2016 were identical to those in effect today, because Congress has not changed them since 1983.
  • If you did not file a 2016 return because you thought SSDI was never taxable, the IRS may still contact you years later, so understanding what you owed matters now.
  • You can file an amended 2016 return (Form 1040-X) if you missed that year, though the IRS has time limits on how far back you can claim refunds.

The income thresholds that applied in 2016

The threshold amounts were fixed by law in 1983 and have not moved since. For 2016, if you were a single filer, you hit the first threshold at $25,000 of combined income. If you were married filing jointly, the threshold was $32,000. If you were married filing separately, the threshold was $0 — meaning any combined income at all could trigger taxation.

Combined income is not the same as your SSDI payment. It is calculated as your adjusted gross income (wages, interest, dividends, and other income sources) plus any nontaxable interest (such as from municipal bonds) plus half of your SSDI benefits for the year. If that total stayed below the threshold, your SSDI was not taxable. If it went above, a portion of your benefits became taxable.

The portion that became taxable was either 50 percent or 85 percent of your SSDI, depending on how far above the threshold your combined income went. This two-tier system has been in place since 1983 and was in effect in 2016.

How to calculate what you owed in 2016

If your combined income in 2016 was below your threshold, you owed no federal tax on your SSDI, and you may not have needed to file a return at all (depending on other income). If your combined income was above the threshold, you needed to work through the calculation to find the taxable portion.

The first step is to find the amount by which you exceeded the threshold. If you were single and your combined income was $30,000, you exceeded the $25,000 threshold by $5,000. Next, you calculate 50 percent of that excess ($2,500 in this example). You then compare that to 50 percent of your total SSDI for the year. Whichever is smaller is the amount of SSDI that becomes taxable under the first tier.

If your combined income was high enough to trigger the second tier (above $34,000 for single filers in 2016), an additional portion of your SSDI became taxable at the 85 percent rate. The Social Security Administration publishes a worksheet each year to walk through this calculation, and the IRS includes it in Publication 915.

What to do if you did not file a 2016 return

If you received SSDI in 2016 and did not file a federal income tax return that year, you may still need to address it. The IRS can go back three years from the filing important date to assess tax owed, and in some cases longer. If you owed tax in 2016 and did not pay it, the IRS may contact you now or in the future.

To file a 2016 return now, you use Form 1040-X (Amended U.S. Individual Income Tax Return). You will need to gather your 2016 records: your Social Security statement showing SSDI received that year (you can request this from SSA), any W-2s or 1099s from other income, and documentation of any deductions or credits you claimed. If you cannot locate your Social Security statement, you can request a replacement from the Social Security Administration.

The IRS generally allows you to claim a refund for up to three years of back taxes. If you overpaid in 2016 (for example, if your employer withheld tax from wages but you had no tax liability once SSDI was factored in), filing now could result in a refund, though interest does not accrue in your favor on refunds older than three years.

Where to find your 2016 SSDI payment records

Your Social Security statement for 2016 shows exactly how much SSDI you received that year, broken down by month. You can request a replacement statement from the Social Security Administration by calling 1-800-772-1213 or visiting your local Social Security office. Online, you can create a my Social Security account and view your statement, though the account shows current information and may not have archived 2016 data readily available.

If you kept your tax return from 2016 or have a copy from your tax preparer, check line 5b of Form 1040 (the taxable portion of your SSDI) to see what amount was reported. If you did not file in 2016, you will need the raw SSDI figure from your Social Security statement to calculate what you owed.

State income tax on SSDI in 2016

Federal taxation and state taxation are separate. In 2016, most states did not tax SSDI benefits, but a few did. The states that taxed SSDI in 2016 were Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont. If you lived in one of these states in 2016, you may have owed state income tax on your SSDI even if you owed no federal tax.

State rules vary widely. Some states use the same federal thresholds; others have their own. Some states tax SSDI only if your income exceeds a higher threshold than the federal one. If you lived in a state that taxed SSDI in 2016 and did not file a state return, you may need to address that separately from your federal return. Contact your state tax authority or a tax professional familiar with your state's rules.

Frequently Asked Questions

Can I file a 2016 return now if I did not file one at the time?

Yes. You can file Form 1040-X (Amended U.S. Individual Income Tax Return) for 2016 at any time, though the IRS generally limits refunds to three years from the original filing important date. If you owed tax in 2016 and did not pay, filing now does not erase the debt, but it stops the IRS from having to estimate what you owed.

What if I filed a 2016 return but did not include SSDI taxation?

You can file an amended return (Form 1040-X) to correct it. If you underpaid tax, you will owe the difference plus interest and possibly penalties. If you overpaid, you can claim a refund, though refunds older than three years from the filing important date may not be paid.

Does the 2016 SSDI threshold amount ever change?

No. Congress set the thresholds in 1983 at $25,000 for single filers and $32,000 for married filing jointly, and they have remained the same ever since. Unlike other tax brackets, these thresholds are not adjusted for inflation.

If I was on SSDI and also working in 2016, how did that affect my taxes?

Your wages count toward your combined income, which determines whether your SSDI is taxable. If you earned wages in 2016, your combined income likely exceeded the threshold, making a portion of your SSDI taxable. You would have reported both your wages (on a W-2) and the taxable portion of your SSDI on your return.

Where do I report the taxable portion of SSDI on a 2016 return?

On Form 1040, line 5b shows the taxable portion of your SSDI benefits. Line 5a shows the total SSDI you received. The difference between the two is the nontaxable portion. Your Social Security Administration statement shows the total; the calculation of what is taxable depends on your other income.