Whether you file taxes on SSDI depends on your total income, not just what Social Security pays you

The 2016 tax filing requirement for SSDI is based on a threshold set by the IRS each year. For 2016, you had to file a federal tax return if your combined income — including SSDI, wages, interest, and other sources — exceeded certain amounts. The threshold varied depending on your age and filing status.

SSDI itself is not automatically taxable. But if you had other income during the year, part of your SSDI benefits could become taxable. This is why the IRS looks at your total income picture, not SSDI alone. The exact threshold that applied to you in 2016 depended on whether you were single, married filing jointly, or in another filing status.

If you received SSDI in 2016 and are now looking back at that year's taxes, the IRS Form SSA-1099 you received shows the amount of benefits paid to you. That form helps you and a tax preparer figure out whether any of those benefits were taxable.

Key Takeaways

  • The 2016 filing threshold for SSDI recipients varied by age and filing status, and you needed to check your specific situation against the IRS threshold for that year.
  • SSDI is only taxable if your combined income from all sources exceeds the threshold; SSDI alone does not trigger a filing requirement.
  • You will receive Form SSA-1099 from Social Security showing your 2016 SSDI payments, which you use to calculate whether any benefits are taxable.
  • If you did not file taxes in 2016 when you should have, you can still file a return for that year to claim refunds or correct your record.

The 2016 income thresholds that determined filing requirements

In 2016, the IRS set different thresholds based on your age and filing status. For a single person under 65, the threshold was $10,300. If you were 65 or older and single, it was $11,850. For married couples filing jointly where both were under 65, the threshold was $20,600. If one spouse was 65 or older, it was $21,950, and if both were 65 or older, it was $23,300.

These thresholds applied to your total income for the year. If you received SSDI and also had wages from work, self-employment income, interest, dividends, or other income, you added all of it together. If the total exceeded your threshold, you were required to file a return.

The threshold amounts change each year because the IRS adjusts them for inflation. If you are looking at 2016 taxes now, use the 2016 thresholds, not current ones. A tax preparer or the IRS website can confirm which threshold applied to your specific situation.

How SSDI becomes taxable when you have other income

SSDI benefits themselves are not income in the traditional sense — they do not count toward your threshold for filing. However, if your income from other sources pushes you above a certain point, the IRS counts part of your SSDI as taxable income.

The IRS uses a formula called the "combined income" test. It adds half of your SSDI benefits to your other income (wages, interest, pensions, and so on). If that combined total exceeds a second threshold — $25,000 for single filers in 2016, or $32,000 for married couples filing jointly — then up to 85 percent of your SSDI can be taxable.

This means you could have had SSDI in 2016 and still owed no taxes if your other income was low enough. But if you worked part-time, received a pension, or had investment income, that other income could have made part of your SSDI taxable. The Form SSA-1099 you received helps you and a tax preparer work through this calculation.

What to do if you did not file taxes in 2016

If you received SSDI in 2016 and did not file a return that year, you can still file one now. The IRS does not have a time limit on filing a return to claim a refund, though there are limits on how far back you can go. For 2016 taxes, you can file at any time and potentially recover refunds from that year.

To file 2016 taxes now, you will need your Form SSA-1099 from Social Security (showing your SSDI payments), any W-2s from employers, and records of other income. If you no longer have the SSA-1099, you can request a copy from Social Security by calling 1-800-772-1213 or visiting your local Social Security office.

A tax preparer, community tax clinic, or the IRS Free File program can help you file 2016 taxes. Many community organizations offer free tax preparation for people with low to moderate income. You can find one near you through the IRS Volunteer Income Tax information (VITA) program.

Understanding Form SSA-1099 and what it shows

Social Security sends Form SSA-1099 to everyone who received SSDI during the year. In 2016, this form showed the total amount of SSDI benefits you received. Box 5 on the form shows the amount, and Box 3 shows how much, if any, was withheld for taxes.

You use this form when you file your tax return. It tells the IRS how much SSDI you received, which is necessary for calculating whether any of it is taxable. If you lost your 2016 SSA-1099, request a replacement from Social Security. You will need it to file your return accurately.

The SSA-1099 is not the same as a W-2. It does not mean SSDI is automatically taxable — it is straightforward the document that reports how much you received. Your tax preparer uses it along with your other income information to determine your actual tax liability.

When SSDI is withheld for taxes

In some cases, Social Security withholds federal income tax directly from your SSDI payments. This happens when you request it or when you owe back taxes. In 2016, if taxes were withheld from your benefits, that amount appears on your Form SSA-1099 in Box 3.

If taxes were withheld, you may have overpaid your taxes for the year, which means you could receive a refund when you file your return. This is another reason to file even if you think you do not owe taxes — you might be due money back.

To request tax withholding from your SSDI in future years, you can fill out Form W-4V and send it to Social Security. This is optional, but some people choose to do it to avoid owing taxes at the end of the year.

Frequently Asked Questions

Was all of my 2016 SSDI taxable, or just part of it?

Only part of it could be taxable, and only if your combined income exceeded the IRS threshold. The IRS uses a formula that can make up to 85 percent of your SSDI taxable, but only if you had other income pushing you over the limit. A tax preparer can calculate the exact amount using your SSA-1099 and other income records.

Do I have to file taxes if I only received SSDI in 2016 and had no other income?

No. If SSDI was your only income in 2016, you did not have to file a return. However, if taxes were withheld from your benefits, filing a return would let you claim a refund of that money.

What if I filed my 2016 taxes incorrectly?

You can file an amended return using Form 1040-X. The IRS allows you to correct past returns. A tax preparer can help you determine whether amending makes sense for your situation and handle the filing.

Where do I find the 2016 tax thresholds if my situation was complicated?

The IRS website archives past years' tax information, and a tax preparer or VITA volunteer can look up the exact thresholds that applied to your filing status and age in 2016. You can also call the IRS at 1-800-829-1040 with specific questions about that year.