You may have to file taxes on SSDI income, depending on your total income and filing status

Social Security Disability Insurance (SSDI) payments themselves are not taxable income. However, if you have other income—wages from work, interest, pensions, or self-employment—you may be required to file a federal tax return. The IRS uses a formula called "combined income" to determine whether your SSDI is taxable. Combined income includes your adjusted gross income, nontaxable interest, and half of your SSDI benefits.

Even if you are not required to file, filing a return can be beneficial. Many people on SSDI are may have access to to the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit, both of which require filing to receive the money. Filing also protects you from penalties and keeps your Social Security record accurate.

The threshold at which you must file depends on your age, filing status, and whether you have self-employment income. A single person under 65 with no self-employment income must file if their gross income is $13,850 or more (2023 tax year). These thresholds change yearly, so you should check the current year's limits on the IRS website or with a tax professional.

Key Takeaways

  • SSDI payments themselves are never taxable, but other income you receive may trigger a filing requirement.
  • The IRS uses combined income—which includes half your SSDI benefits—to determine if any of your SSDI becomes taxable.
  • You may owe taxes on your SSDI only if your combined income exceeds a threshold that varies by age and filing status.
  • Filing a tax return even when not required can earn you the Earned Income Tax Credit or Additional Child Tax Credit.
  • Social Security sends Form SSA-1099 in January showing your SSDI payments; use this to complete your return.

How the IRS determines if your SSDI is taxable

The IRS does not tax SSDI the same way it taxes wages or pensions. Instead, it uses a two-tier system based on your combined income. Combined income is calculated as your adjusted gross income plus nontaxable interest plus half of your SSDI benefits for the year.

If your combined income is below $25,000 (single) or $32,000 (married filing jointly), none of your SSDI is taxable. If your combined income is between $25,000 and $34,000 (single) or $32,000 and $44,000 (married filing jointly), up to 50 percent of your SSDI may be taxable. If your combined income exceeds $34,000 (single) or $44,000 (married filing jointly), up to 85 percent of your SSDI may be taxable.

These thresholds have not changed since 1984, even though the cost of living has risen. This means more people on SSDI are affected by taxation each year. If you have any income beyond SSDI—even small amounts from part-time work or a pension—you should calculate your combined income to know where you stand.

When you must file a federal tax return

You must file a federal tax return if your gross income exceeds the threshold for your filing status and age. For the 2023 tax year, a single person under 65 with no self-employment income must file if gross income is $13,850 or more. A single person 65 or older must file if gross income is $15,550 or more. These amounts increase slightly each year.

If you are married filing jointly, both spouses under 65 must file if combined gross income is $27,700 or more. If one spouse is 65 or older, the threshold is $28,700. If both are 65 or older, it is $29,700. Self-employment income has its own rules: you must file if net self-employment income is $400 or more, regardless of other income.

SSDI payments do not count toward gross income for this purpose—only other income does. So if you receive $15,000 in SSDI and $5,000 in wages, your gross income is $5,000, and you would not be required to file (assuming you are under 65 and single). However, you may still want to file to claim tax credits.

What documents you need to file

Social Security mails Form SSA-1099 to you in January of each year. This form shows the total SSDI benefits you received in the previous year. You will need this form to complete your federal tax return, even though SSDI itself is not taxable. Keep it with your tax records.

If you have other income, gather the documents that report it: W-2 forms from employers, 1099 forms for self-employment or contract work, 1099-INT for interest income, and 1099-R for pension or retirement distributions. If you are claiming the Earned Income Tax Credit, you will need proof of earned income and your Social Security number or Individual Taxpayer Identification Number (ITIN).

If you paid estimated taxes during the year or had taxes withheld from other income, keep records of those payments. You will report them on your return to reduce the amount you owe or increase your refund.

Filing options and where to get help

You can file your federal tax return by mail, online through IRS-approved software, or with the help of a tax professional. The IRS Free File program offers free tax software to people with income below a certain threshold—typically around $60,000 to $70,000, depending on the year. You can access Free File through the IRS website.

If you prefer in-person help, the IRS operates Volunteer Income Tax information (VITA) sites in many communities. VITA provides free tax preparation for people with low to moderate income. You can find a VITA site near you by calling 211 or searching the IRS locator on its website.

A tax professional or CPA can also prepare your return for a fee. This is useful if your situation is complex—for example, if you have self-employment income, rental income, or significant investment income alongside SSDI. A professional can also advise you on whether filing is beneficial even if you are not required to.

How work affects your SSDI and your taxes

If you work while receiving SSDI, you must report your earnings to Social Security. Work does not automatically end your benefits, but high earnings can reduce or suspend them. Social Security has a program called Impairment Related Work Expenses (IRWE) that allows you to deduct certain work-related costs—such as attendant care, medical devices, or transportation—before your earnings are counted against your benefit limit.

For tax purposes, wages from work are counted as gross income and may require you to file a return. They also increase your combined income, which may make some of your SSDI taxable. However, the IRWE deduction that Social Security allows does not reduce your taxable income for IRS purposes. You report your full wages to the IRS, even if Social Security counts less of them toward your benefit limit.

If you are working and receiving SSDI, coordinate with both Social Security and the IRS. Report earnings to Social Security within the required timeframe, and report all income to the IRS on your tax return. Failing to report work income to either agency can result in overpayments, penalties, or loss of benefits.

What happens if you do not file when required

If you are required to file and do not, the IRS may assess a failure-to-file penalty. This penalty is typically 5 percent of the unpaid tax for each month your return is late, up to 25 percent. If you owe no tax but are may have access to to a refund, there is no penalty, but you lose the refund if you do not file within three years.

Additionally, if you are may have access to to the Earned Income Tax Credit or Additional Child Tax Credit and do not file, you cannot receive that money. These credits are worth hundreds or thousands of dollars per year for many people on SSDI with low income.

If you realize you should have filed in a prior year, you can still file a late return. The IRS generally does not pursue penalties if you file within a few years and owe little or no tax. Contact the IRS or a tax professional to discuss your situation.

Frequently Asked Questions

Can I file my taxes online if I receive SSDI?

Yes. You can use IRS Free File software if your income is below the threshold, or you can purchase commercial tax software. You can also file by mail or work with a tax professional. SSDI itself does not prevent you from using any filing method.

Do I have to report my SSDI to the IRS?

You do not report SSDI as income on your tax return because it is not taxable. However, you use the amount shown on Form SSA-1099 to calculate your combined income and determine whether any of your SSDI becomes taxable due to other income you have.

What if I have very little income besides SSDI?

If your only income is SSDI, you are not required to file. However, if you have any other income—even $1 in interest or wages—you should calculate your combined income to see if filing is required or beneficial. Filing can earn you tax credits even if you owe no tax.

Will filing taxes affect my SSDI benefits?

Filing a tax return does not affect your SSDI benefits. Social Security and the IRS are separate agencies. However, if you work and earn wages, you must report those earnings to Social Security, as they may affect your benefit amount.

Where do I get Form SSA-1099?

Social Security mails Form SSA-1099 to you in January each year. If you do not receive it by early February, you can request a replacement by calling Social Security at 1-800-772-1213 or visiting your local Social Security office.