Whether your 2018 SSDI payments were taxable depended on your total income

In 2018, Social Security Disability Insurance (SSDI) payments were taxable only if your combined income exceeded certain thresholds. Combined income means your adjusted gross income plus nontaxable interest plus half your SSDI benefits. The threshold was $25,000 for single filers and $32,000 for married couples filing jointly. If you stayed below these amounts, you owed no federal tax on your SSDI.

If your combined income did exceed the threshold, you paid tax on either 50% or 85% of your benefits, depending on how far over the limit you went. This calculation was done on your 2018 tax return using IRS worksheets, not by Social Security itself. The IRS sent you a Form SSA-1099 in January 2019 showing what you received in 2018, which you used to complete your return.

Key Takeaways

  • SSDI was taxable in 2018 only if your combined income (wages, interest, and half your benefits) exceeded $25,000 for single filers or $32,000 for married filing jointly.
  • If you were below the threshold, you reported your SSDI on your tax return but paid no federal tax on it.
  • If you were above the threshold, you calculated your tax using IRS worksheets included in the Form 1040 instructions for that year.
  • Social Security sent you a Form SSA-1099 in early 2019 showing your 2018 benefit total, which you needed to file your return.

How the $25,000 and $32,000 thresholds worked

The threshold amount was not just your SSDI payment. It was your combined income, calculated this way: take your adjusted gross income (wages, self-employment income, taxable interest, dividends, and other sources), add any nontaxable interest (such as from municipal bonds), then add half of your total SSDI benefits for the year. If that sum was $25,000 or less (single) or $32,000 or less (married filing jointly), you owed no tax on your SSDI.

Example: In 2018, you received $12,000 in SSDI and had $15,000 in wages. Your combined income was $15,000 + (half of $12,000) = $15,000 + $6,000 = $21,000. Since $21,000 is below $25,000, none of your SSDI was taxable that year.

Another example: You received $12,000 in SSDI and had $20,000 in wages. Combined income: $20,000 + $6,000 = $26,000. You are $1,000 over the $25,000 threshold, so some of your SSDI became taxable. You would use the IRS worksheet to calculate the exact amount.

What happened if you exceeded the threshold

If your combined income was above the threshold, you did not automatically owe tax on all your SSDI. Instead, you calculated taxable benefits using a two-tier system. The first tier applied if your combined income was between the threshold and a second limit ($34,000 for single filers, $44,000 for married filing jointly in 2018). In this range, up to 50% of your benefits could be taxable. If your combined income exceeded the second limit, up to 85% of your benefits could be taxable.

The actual calculation was complex and required the worksheets in the IRS Form 1040 instructions. You could not straightforward multiply your benefits by 50% or 85%. The worksheets accounted for how much you were over each threshold and compared it to your total benefits. Many people used tax software or a tax preparer to complete this calculation correctly.

Form SSA-1099 and reporting on your tax return

In January 2019, Social Security mailed you a Form SSA-1099 showing the total SSDI you received in 2018. This form went to the address on file with Social Security. Box 5 of the form showed your net benefits (the amount after any Medicare premiums were deducted). You needed this form to file your 2018 tax return, even if none of your benefits were taxable.

You reported your SSDI on your Form 1040 (or 1040-SR if you were 65 or older). Lines 5a and 5b asked for your Social Security benefits. Line 5a was the total from Box 5 of your SSA-1099. Line 5b was the taxable portion, which you calculated using the worksheets if your combined income was above the threshold, or left blank if it was below.

If you did not receive a Form SSA-1099 by early February 2019, you could contact Social Security at 1-800-772-1213 to request a replacement or view it online through your my Social Security account.

State taxes and SSDI in 2018

Federal tax rules and state tax rules were different. Some states did not tax SSDI at all, regardless of income. Others taxed SSDI using their own thresholds and rules. A few states taxed SSDI the same way the federal government did. You needed to check your state's rules or ask a tax preparer what applied to you.

States that did not tax SSDI in 2018 included Colorado, Illinois, Kansas, Louisiana, Mississippi, Missouri, Montana, Nevada, New Hampshire, New Mexico, North Carolina, Ohio, Oklahoma, Pennsylvania, South Carolina, Tennessee, Texas, Washington, Wisconsin, and Wyoming. If you lived in any of these states, you did not owe state tax on your SSDI even if you owed federal tax. If you lived elsewhere, you had to research your state's rules or consult a tax professional.

What to do if you did not file a 2018 return

If your only income in 2018 was SSDI and it was below the taxable threshold, you were not required to file a federal tax return. However, if you had other income (wages, interest, self-employment income) or if you wanted to claim a refund, you may have needed to file even though you owed no tax on your SSDI.

If you did not file and believe you should have, or if you think you overpaid taxes in 2018, you can still file a 2018 return. The important date to claim a refund is generally three years from the original due date (April 15, 2021 for 2018 returns). You would file Form 1040 for 2018 with your SSA-1099 and any other income documents, and the IRS would process your refund.

Frequently Asked Questions

Do I have to report SSDI on my tax return if it was not taxable?

Yes. You must report your SSDI on your Form 1040 even if none of it was taxable. You enter the total from Box 5 of your SSA-1099 on line 5a, and leave line 5b blank if no portion was taxable. Reporting it does not mean you owe tax; it means you are providing the IRS with complete income information.

What if I lost my SSA-1099 for 2018?

Contact Social Security at 1-800-772-1213 and request a replacement Form SSA-1099. You can also create a my Social Security account online and view your 1099 there. If you need the form urgently, Social Security can sometimes email or mail a copy within a few business days.

Does SSDI count as income for other purposes, like student loans or Medicare?

SSDI is counted as income for some programs and not others. For federal student loan income-driven repayment plans, SSDI generally does not count. For Medicare premium calculations, SSDI does count. For Medicaid and other state programs, rules vary. Check with the specific program or agency to learn how they treat SSDI.

If I owed taxes on my SSDI in 2018, could I have had taxes withheld?

Yes. You could request that Social Security withhold federal income tax from your SSDI payments using Form W-4V. This was optional but could help you avoid owing a large amount at tax time. If you wanted to set up withholding for 2018, you would have needed to submit the form before the year ended.