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Must I Pay Income Tax on Social Security Disability Benefits? - CNET

As with most Social Security questions, the answer is “it depends.” Social Security has an earnings test which affects anyone who is collecting Social Security benefits before they have reached their full retirement age, and that includes those collecting Social Security Disability Insurance (SSDI) benefits. Many on Social Security disability do not work, but some do work a limited amount (Social Security allows limited working while collecting SSDI benefits).

However, work earnings aren’t the only kind of income which determines if SSDI benefits are taxable. Rather, the IRS uses a measure called “modified adjusted gross income” or “MAGI.” MAGI is your Adjusted Gross Income on your tax return (which would include investment income), plus any non-taxable interest you may have had, plus 50% of the SS benefits you received during the tax year. Social Security benefits are taxable for an individual if their MAGI is more than $25,000, or more than $32,000 for a married couple filing jointly. There are actually more thresholds at which progressively higher amounts of your Social Security disability benefits will be taxed, as explained in this CNET article by Katie Teague. Click here to read more.

Also, if you’re unsure about how these basics apply to you, or if you have any questions about your individual situation under Social Security, note that the AMAC Foundation provides a free-to-the-public advisory service to help Americans navigate the complexities of this program. All questions are answered quickly, at no charge. Learn more about it here…

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