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SSDI (Disability) and Taxation - MARCA

Are “SSDI” (Social Security Disability Insurance) benefits taxable? Well, just as with regular Social Security benefits, they are if your combined household income from all sources is high enough. SSDI benefits are, essentially, early SS retirement benefits for those unable to work, so you can’t escape the IRS rules for income tax on your Social Security benefits because you’re disabled. The thresholds for taxation of SSDI benefits are the same as for regular SS benefits ($25,000 for single filers and $32,000 for those filing “married/jointly”) and, even though those on SSDI won’t (or shouldn’t) have significant income from working, other income such as withdrawals from tax-advantaged accounts (IRA, 401(k), etc.) and, if you’re married, spousal earnings, still count when the IRS determines if your SSDI benefits are taxable. If you are collecting SSDI benefits and are unsure whether your benefits will be taxable, and especially if you have a significant lump-sum SSDI back pay distribution, it would be wise to consult with a qualified income tax advisor for additional guidance. This MARCA Personal Finance article explains.

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