What tax credits are available to people receiving SSDI

If you receive Social Security Disability Insurance (SSDI), you may be able to claim the Earned Income Tax Credit (EITC) or the Credit for Other Dependents on your federal tax return, depending on your income and work situation. You do not receive a tax credit straightforward for being on SSDI — the credit depends on whether you meet the specific rules for each one. The most common credit for working people with disabilities is the EITC, which reduces the taxes you owe or increases your refund if your earned income falls within certain ranges.

SSDI payments themselves are not taxable income in most cases, which means they do not count toward the income limits that determine whether you can claim these credits. This is important because it means your SSDI check does not push you over the threshold. However, if you have other income — from work, investments, or other sources — that income does count, and it is what determines whether you may have access to.

Key Takeaways

  • SSDI payments are not taxable and do not count as income when you figure out if you can claim the Earned Income Tax Credit.
  • The Earned Income Tax Credit is available to people with SSDI who have earned income from work, with maximum credits ranging from roughly $600 to $3,700 depending on your filing status and dependents.
  • You must file a tax return to claim these credits, even if your total income is below the filing requirement, because that is how you receive the refund.
  • The Credit for Other Dependents may help if you support a child or dependent family member and your income is below certain limits.
  • State tax credits vary widely — some states offer their own version of the Earned Income Tax Credit with different income limits and credit amounts.

How the Earned Income Tax Credit works with SSDI income

The Earned Income Tax Credit (EITC) is a refundable tax credit, which means if the credit is larger than the taxes you owe, the IRS sends you the difference as a refund. To claim it, you must have earned income — money from wages, self-employment, or certain other work-related sources. SSDI does not count as earned income, so it does not help you may have access to for the EITC, but it also does not disqualify you or reduce the credit amount.

The credit amount depends on three things: your earned income, your filing status (single, married filing jointly, head of household), and whether you have may have access to children or dependents. For the 2024 tax year, the maximum credit ranges from about $600 for a single person with no children to roughly $3,700 for a married couple filing jointly with three or more may have access to children. The exact amounts change each year, and the IRS publishes updated tables on its website.

Because SSDI is not counted as income, a person receiving $1,200 per month in SSDI plus $800 per month in wages would have $9,600 in earned income for the year — only the $9,600 counts toward the EITC calculation. This is a significant advantage if you are working part-time or have low wages, because your SSDI check does not reduce the credit you can claim.

Income limits and how SSDI affects them

Each tax credit has an income limit — if your total income exceeds that limit, you cannot claim the credit. For the EITC, the income limit varies by filing status and number of dependents. For 2024, the limit ranges from about $17,000 for a single person with no children to roughly $63,000 for a married couple filing jointly with three or more children. These limits are adjusted each year for inflation.

The key point is that SSDI payments do not count toward these limits. If you receive $14,400 in SSDI and $12,000 in wages, your total income for the EITC calculation is $12,000 — not $26,400. This means you may may have access to for the credit even though your total household income seems higher. However, other income sources do count: interest, dividends, rental income, and income from a spouse all factor into the limit.

The Credit for Other Dependents has different income limits. For 2024, the credit begins to phase out at $400,000 for married couples filing jointly and $200,000 for single filers. Again, SSDI does not count toward these limits, only your other income does.

Filing requirements and how to claim the credits

You must file a federal tax return to claim the EITC or the Credit for Other Dependents, even if your income is below the normal filing requirement. This is because these are refundable credits — if you do not file, you do not receive the refund. The IRS does not automatically send you the money; you have to claim it on Form 1040 or Form 1040-SR (for people age 65 and older).

To claim the EITC, you will also need to complete Schedule EIC (Earned Income Credit) and attach it to your return. If you have may have access to children, you must provide their Social Security numbers and meet certain relationship and residency tests. If you are claiming the Credit for Other Dependents, you provide the dependent's information on your return.

You can file on your own using tax software, work with a tax preparer, or use free tax preparation services. The IRS Free File program offers free tax software to people with income below a certain threshold (roughly $79,000 for 2024). Many community organizations and libraries also offer free tax help, and some specialize in working with people who have disabilities or low income.

State tax credits for people with disabilities

Some states offer their own earned income tax credits or disability-specific tax credits. These vary widely by state — some states have no credit at all, while others offer credits that work similarly to the federal EITC but with different income limits and credit amounts. A few states offer credits specifically for people with disabilities, though these are less common.

To find out whether your state offers a credit, check your state's tax authority website or ask a tax preparer. If your state does offer a credit, you will typically claim it on your state tax return using a separate form or schedule. State credits are separate from the federal credits, so you may be able to claim both.

What happens if you work while receiving SSDI

If you are working and receiving SSDI, you may be subject to work incentive rules that affect your benefits, but these rules do not prevent you from claiming tax credits. The IRS and Social Security are separate systems — earning money does not automatically reduce your SSDI check, and claiming a tax credit does not affect your benefits.

However, if your work income is high enough, it may eventually affect your SSDI benefits through the Substantial Gainful Activity (SGA) rules. This is a Social Security question, not a tax question, and it is handled separately. You should report your work to Social Security and understand how it affects your benefits, but that process is independent of whether you claim tax credits on your return.

Frequently Asked Questions

Do I have to report my SSDI income on my tax return?

No. SSDI payments are not taxable income in most cases, so you do not report them on your federal tax return. However, you must still file a return if you have other income and want to claim the Earned Income Tax Credit or other credits, because filing is how you receive the refund.

Can I claim the Earned Income Tax Credit if I did not work the entire year?

Yes. The EITC is based on your earned income for the year, regardless of how many months you worked. If you earned $8,000 over six months, that counts the same as earning $8,000 over twelve months. You must have at least some earned income to claim the credit, but there is no minimum number of months you must have worked.

What if I am married and my spouse works but I receive SSDI?

If you file jointly, your spouse's earned income counts toward the EITC calculation, and your SSDI does not reduce the credit. You may may have access to for a larger credit as a married couple than you would as a single filer. However, if your spouse has significant income, it may push you over the income limit for the credit, depending on your filing status and dependents.

Do I need to report claiming a tax credit to Social Security?

No. Tax credits are handled by the IRS and do not affect your SSDI benefits. Social Security does not track tax credits, and claiming one does not change your benefit amount or may be able to access. However, if the credit results in a refund that increases your bank account balance, that could affect Supplemental Security Income (SSI) if you receive it, because SSI has asset limits.

What if I received a tax credit I was not supposed to get?

If the IRS determines you claimed a credit you did not may have access to for, they will send you a notice explaining the error and the amount you owe back. You have the right to respond and provide documentation if you believe the information is wrong. If you owe money, you can set up a payment plan with the IRS. Working with a tax professional or a free tax clinic can help you respond to an IRS notice.