You may have to file taxes even though you receive SSDI

Whether you file taxes depends on how much money you earned that year and whether you have other income besides your SSDI check. Social Security Disability Insurance itself is not taxable income — the federal government does not tax your monthly benefit payment. But if you work, receive interest from a bank account, get rental income, or have other earnings, those amounts can push you into a situation where you owe taxes or should file anyway.

The IRS has specific income thresholds that determine whether you must file. These thresholds change each year and depend on your age and filing status. If your total income — including wages, self-employment income, interest, and dividends, but not your SSDI check — falls below the threshold for your situation, you do not have to file. If it exceeds the threshold, you do.

Even if you are not required to file, you may want to file anyway. If your employer withheld taxes from your paycheck, filing a return is how you get that money back. The same is true if you paid estimated taxes during the year.

Key Takeaways

  • Your SSDI benefit itself is never taxable, but other income you earn during the year may require you to file.
  • The IRS sets income thresholds each year that determine whether filing is required; these thresholds vary by age and filing status.
  • If your employer withheld taxes from wages or you paid estimated taxes, you should file to receive any refund owed to you.
  • You can find the current year's income thresholds on the IRS website or by calling the IRS directly at 1-800-829-1040.

How SSDI income is treated differently from other income

The Social Security Administration and the IRS treat SSDI payments as a form of social insurance, not as taxable income. This means your monthly SSDI check does not count toward the income threshold that determines whether you must file a tax return. If SSDI were your only source of income for the year, you would not owe taxes and would not be required to file.

However, the moment you earn money from work — whether as a W-2 employee, a self-employed person, or through gig work — that income is taxable and counts toward your filing threshold. The same applies to interest earned in savings accounts, dividends from investments, rental income, and other forms of earnings. These are all separate from your SSDI check and are treated as regular income by the IRS.

It is important to understand this distinction because many people assume that receiving disability benefits means they do not file taxes at all. In reality, SSDI protects only the disability benefit itself from taxation, not any other money you receive.

Income thresholds for filing in 2024

The IRS updates income thresholds each year. For 2024, the threshold depends on your age and filing status. If you are single and under 65, you must file if your gross income was $14,600 or more. If you are single and 65 or older, the threshold is $17,550. These numbers include all income except your SSDI benefit.

If you are married filing jointly and both spouses are under 65, you must file if your combined gross income was $29,200 or more. If one spouse is 65 or older, the threshold rises to $30,750. If both are 65 or older, it is $32,300.

These thresholds explore to 2024 tax returns filed in 2025. The IRS announces new thresholds each year, usually in October or November for the following tax year. You can find the current thresholds on the IRS website at irs.gov or by calling 1-800-829-1040. Your tax software will also ask you questions to determine whether you need to file based on your specific situation.

When you should file even if you are not required to

Filing a tax return is optional if your income falls below the threshold — but it may still be in your interest to do so. The most common reason is a tax refund. If your employer withheld federal income tax from your paychecks during the year, filing a return is the only way to recover that money. The IRS does not automatically return withheld taxes; you must claim them by filing.

Similarly, if you paid estimated taxes during the year — something self-employed people often do — you need to file to account for those payments and receive any refund owed. You may also be may have access to to tax credits that require you to file, such as the Earned Income Tax Credit (EITC) if you worked and earned below certain income limits. These credits can result in a refund even if no taxes were withheld.

Another reason to file is to establish a record of your income for the year. Some programs, lenders, or government agencies may ask for tax returns as proof of income. Having filed returns on record can make it easier to document your financial situation if needed.

Work incentives and how they affect your tax filing

SSDI includes several work incentives designed to help you earn money without losing your benefits when ready. These programs — such as Impairment Related Work Expenses (IRWE), Plans to Achieve Self-Support (PASS), and the Student Earned Income Exclusion — allow you to set aside certain earnings or deductions without affecting your benefit amount.

These work incentives do not change whether you must file taxes. The IRS still counts your gross income the same way. However, they do affect how much of your earnings reduce your SSDI check. For tax purposes, you report your full earnings; for benefit purposes, certain amounts may be excluded. This means you could owe taxes on income that does not reduce your SSDI benefit, or vice versa. Understanding both the tax rules and the Social Security work incentive rules is important if you are working while receiving SSDI.

If you are using a work incentive, you may want to consult with a benefits planner or tax professional who understands both systems. Work Incentives Planning and information (WIPA) projects in your state offer free counseling on how work affects your benefits. You can find your local WIPA project at vcu-ntdc.org.

How to file your taxes

You can file your taxes in several ways. The most common is using tax software, which walks you through questions about your income and automatically calculates what you owe or what refund is due. Many people use free software options like IRS Free File if their income is below a certain level, or commercial software like TurboTax, H&R Block, or TaxAct.

You can also file by paper using IRS Form 1040 and any schedules that explore to your situation. The IRS provides these forms and instructions on irs.gov. If you earned wages as an employee, you will receive a W-2 form from your employer by January 31. If you were self-employed, you will need to report your income on Schedule C and pay self-employment tax on Schedule SE.

If you need help, you can visit a local IRS office, call 1-800-829-1040, or find free tax preparation information through the Volunteer Income Tax information (VITA) program. VITA offers free tax preparation to people with low to moderate income. You can find a VITA site near you by searching irs.gov or calling 211.

What happens if you do not file when you should

If you are required to file but do not, the IRS can assess penalties and interest on any taxes owed. The failure-to-file penalty is typically 5 percent of the unpaid tax for each month the return is late, up to 25 percent. If you owe taxes and do not pay, additional penalties and interest accrue. These can add significantly to what you originally owed.

If you are owed a refund and do not file, you straightforward do not receive it. The IRS does not pursue you for a refund you are owed, but the money remains unclaimed. You generally have three years to file and claim a refund before the IRS keeps it.

If you realize you should have filed but did not, you can file a late return at any time. It is better to file late than not to file at all, especially if you owe taxes. Filing late still results in penalties, but filing shows good faith and can reduce the total amount owed.

Frequently Asked Questions

Do I have to report my SSDI income to the IRS?

No. Your SSDI benefit is not reported as income on your tax return. You only report other income you earned that year, such as wages, self-employment income, interest, or dividends. The IRS does not tax your disability benefit.

If I work part-time and earn $8,000 a year, do I have to file?

If you are single and under 65, the 2024 threshold is $14,600, so you would not be required to file based on income alone. However, if your employer withheld taxes from your paychecks, you should file to get that money back. Check your W-2 to see if taxes were withheld.

Can I file taxes online if I receive SSDI?

Yes. Receiving SSDI does not prevent you from filing online. You can use IRS Free File, commercial tax software, or file by paper. The process is the same as for anyone else, except you do not report your SSDI benefit as income.

What if I earned money from self-employment while on SSDI?

Self-employment income is taxable and counts toward your filing threshold. You will need to report it on Schedule C and pay self-employment tax on Schedule SE. This income also affects your SSDI benefit under Social Security's work incentive rules, so you may want to speak with a benefits planner about how it impacts both your taxes and your benefit.

Where can I get free help filing my taxes?

The Volunteer Income Tax information (VITA) program offers free tax preparation to people with low to moderate income. Find a VITA site near you by searching irs.gov or calling 211. You can also call the IRS at 1-800-829-1040 for general questions about filing requirements.