What changed about SSDI taxes in 2019

The rules for whether you owe federal income tax on your SSDI payments did not change in 2019. The same calculation that applied in 2018 and 2020 applied that year: you count your SSDI as income only if your combined income exceeded certain thresholds, and even then, only a portion of your benefits could be taxed.

The thresholds themselves — the dollar amounts that trigger taxation — remained fixed at levels set in 1983 and have not moved since. For 2019, if you were single, the first threshold was $25,000. If you were married filing jointly, it was $32,000. These numbers do not adjust for inflation, which is why more people have found themselves owing tax on SSDI over time, even though the law itself stayed the same.

What matters for 2019 specifically is whether you filed a 2019 tax return and, if so, what your combined income was that year. If you did not file because your income was below the filing requirement, you would not have owed tax on SSDI regardless of the amount you received.

Key Takeaways

  • SSDI taxation in 2019 followed the same rules as every year since 1983: only combined income above $25,000 (single) or $32,000 (married filing jointly) could trigger taxation of benefits.
  • Combined income includes your SSDI, wages, interest, dividends, and half of any Social Security benefits you also received.
  • If your combined income was below the threshold, you owed no tax on SSDI even if you received the full annual benefit amount.
  • The IRS Form 1040 and Schedule 1 (or Form 1040-SR if you were 65 or older) were used to report SSDI income and calculate any tax owed for the 2019 tax year.

How to calculate combined income for 2019

Combined income is not the same as your SSDI payment amount. It is a specific calculation the IRS uses to determine whether any of your SSDI is taxable. For 2019, you added together: your adjusted gross income (AGI), any tax-exempt interest you received, and half of your SSDI benefit for the year.

Start with your W-2 wages, self-employment income, interest, dividends, and any other income you reported on your 2019 tax return. That is your AGI. Then add half of the total SSDI you received in 2019. If you also received Social Security retirement or survivor benefits, add half of those too. The result is your combined income.

For example, if you received $12,000 in SSDI during 2019 and had $15,000 in wages, your combined income would be $15,000 + (half of $12,000) = $21,000. Since $21,000 is below the $25,000 threshold for single filers, none of your SSDI would be taxable that year.

The two-tier system that determined how much SSDI was taxable in 2019

If your combined income exceeded the first threshold, not all of your SSDI became taxable — only a portion did. The IRS used a two-tier system in 2019, just as it does every year.

At the first tier, if your combined income was between $25,000 and $34,000 (single) or between $32,000 and $44,000 (married filing jointly), up to 50 percent of your SSDI could be taxable. At the second tier, if your combined income exceeded $34,000 (single) or $44,000 (married filing jointly), up to 85 percent of your SSDI could be taxable. The actual percentage depended on how far above the threshold you were.

The calculation itself is complex and involves comparing two separate formulas. Most people used either the IRS worksheet in the Form 1040 instructions or tax software to compute it. If you filed a 2019 return and your combined income was above the first threshold, your tax return should show how much of your SSDI was taxable in the "taxable social security benefits" line.

Whether you had to file a 2019 tax return at all

You were required to file a 2019 federal income tax return only if your gross income met certain thresholds. For SSDI recipients, the threshold depended on your age and filing status. If you were under 65 and single, you had to file if your gross income was $12,200 or more. If you were 65 or older and single, the threshold was $13,850.

SSDI counts as gross income for this purpose. So if you received $12,500 in SSDI and had no other income, you would have been required to file a 2019 return even though your combined income was below the $25,000 threshold that triggers SSDI taxation. Filing the return would have shown that you owed no tax on your benefits.

If your income was below the filing threshold, you were not required to file. However, if your employer withheld federal income tax from your wages, or if you were due a refund, filing a return would have been to your advantage even if not required.

What to do if you did not file a 2019 return and think you should have

The important date to file a 2019 tax return was April 15, 2020, but the IRS allowed extensions. If you did not file by the extended important date and your combined income was above the first threshold, you may have owed tax on SSDI for that year. You can still file a 2019 return now using Form 1040 and the 2019 tax instructions.

Contact the IRS at 1-800-829-1040 if you are unsure whether you owed tax for 2019 or if you need help filing a late return. Bring your Social Security Administration (SSA) benefit statement for 2019, which shows the total amount you received that year. The SSA mails this statement (Form SSA-1099) to all beneficiaries by January 31 of the following year, so you should have received yours by early 2020.

If you owe back taxes from 2019, the IRS can set up a payment plan. Filing late does result in penalties and interest, but filing is still better than not filing, because the penalties are smaller if you owe than if you do not file at all.

State income tax on SSDI in 2019

Federal income tax rules and state income tax rules are separate. In 2019, most states did not tax SSDI at all, but a few did. The states that taxed SSDI in 2019 were Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, Rhode Island, Utah, and Vermont. If you lived in one of these states and your income was above that state's threshold, you may have owed state tax on your SSDI even if you owed no federal tax.

State thresholds and calculations vary. Some states use the same federal thresholds; others use different ones. If you lived in one of these states in 2019, check your state tax return or contact your state revenue department to see whether you owed state tax on SSDI that year.

Frequently Asked Questions

Did SSDI tax rules change between 2018 and 2019?

No. The thresholds and calculation method for SSDI taxation have been the same since 1983. The $25,000 and $34,000 thresholds for single filers (and $32,000 and $44,000 for married filers) applied in 2019 just as they did in 2018 and 2020.

If I received SSDI in 2019 but did not work, did I owe tax on it?

Only if your combined income exceeded the threshold. Combined income includes SSDI itself, so if SSDI was your only income and you received less than $25,000 (or $32,000 if married filing jointly), you owed no tax. If you received more than that amount and had no other income, then up to 50 percent of the amount over the threshold could be taxable.

Where do I find my 2019 SSDI benefit statement?

The SSA sends Form SSA-1099 to all beneficiaries by January 31 of the year after you receive benefits. If you did not receive yours, you can create a my Social Security account at ssa.gov and view your benefit statement online, or call the SSA at 1-800-772-1213.

Can I amend my 2019 tax return if I made a mistake with SSDI?

Yes. File Form 1040-X (Amended U.S. Individual Income Tax Return) for 2019. You have three years from the original filing important date to amend a return and claim a refund, or seven years if you are correcting an error that resulted in you paying too much tax.