What Tax Credits SSDI Recipients Can Claim

SSDI income itself is not taxable, but if you have other income—wages, self-employment earnings, interest, or pensions—you may owe federal income tax on that income. The same tax credits available to any taxpayer are available to you. The most common ones for SSDI recipients are the Earned Income Tax Credit (EITC), the Child and Dependent Care Credit, and the Saver's Credit. You do not lose SSDI benefits by claiming these credits; they reduce only your tax bill, not your monthly SSDI payment.

The key is understanding which credits match your situation. If you work part-time or have a spouse who works, the EITC may return hundreds or thousands of dollars. If you pay for childcare to enable work, the Child and Dependent Care Credit covers part of that cost. If you save in a retirement account, the Saver's Credit rewards that savings. Each credit has its own income limits and rules, and you claim them on your tax return, not through Social Security.

Key Takeaways

  • SSDI benefits themselves are not taxable income, but other income you receive may be, and tax credits can reduce what you owe on that income.
  • The Earned Income Tax Credit (EITC) is the largest credit for low-income workers and can return $600 to $3,995 depending on your income and family size.
  • You claim tax credits on your federal tax return (Form 1040) filed with the IRS, not through Social Security.
  • Working part-time while on SSDI does not disqualify you from tax credits, and you can claim credits even if you owe no tax.

The Earned Income Tax Credit (EITC) for SSDI Recipients Who Work

The EITC is a refundable credit, meaning the IRS can send you money even if you owe no tax. If you have earned income from work—wages or self-employment—and your total income is below a certain threshold, you may claim it. For 2024, the income limits range from roughly $16,000 to $63,398 depending on whether you file single, married, or as head of household, and whether you have dependent children.

The credit amount depends on your earned income and family structure. A single filer with no children can receive up to $600. A single filer with one child can receive up to $3,733. A single filer with two or more children can receive up to $3,995. These amounts change each year. You do not have to owe tax to receive the credit; if the credit is larger than your tax bill, the IRS sends you the difference as a refund.

To claim the EITC, you file Form 1040 with Schedule EIC (or claim it directly on the form if using tax software). You must have earned income and meet the income limits. SSDI benefits do not count as earned income, so only your wages or self-employment earnings count toward the credit. If you are married, you and your spouse must file jointly to claim the credit.

Child and Dependent Care Credit

If you pay someone to care for your child under age 13, or for a dependent of any age who cannot care for themselves, while you work or look for work, you may claim the Child and Dependent Care Credit. This credit covers up to $3,000 in care expenses per year if you have one dependent, or $6,000 if you have two or more dependents. The credit is worth 20 to 35 percent of those expenses, depending on your adjusted gross income.

The care must be provided so you can work or attend school full-time. Daycare, preschool, summer camp, and in-home babysitters all count. Care provided by your spouse or a dependent does not count. You claim this credit on Form 2441, which you attach to your Form 1040. You must also provide the care provider's name, address, and tax identification number (usually their Social Security number or Employer Identification Number).

This credit is not refundable, meaning it can reduce your tax bill to zero but cannot generate a refund. However, there is a related provision called the Dependent Care FSA (Flexible Spending Account) that lets you set aside pre-tax wages for care expenses if your employer offers it—that can save you additional money.

Saver's Credit for Retirement Savings

If you contribute to a retirement account—a traditional or Roth IRA, a 401(k), a 403(b), or a straightforward IRA—you may claim the Saver's Credit, also called the Retirement Savings Contributions Credit. This credit is worth 10, 20, or 50 percent of your contributions, depending on your income. For 2024, the income limits are roughly $34,500 for single filers and $69,000 for married couples filing jointly.

The credit is capped at $1,000 per person ($2,000 if married filing jointly). It is not refundable, so it reduces your tax bill but does not generate a refund. You claim it on Form 8880, which you attach to your Form 1040. The purpose of this credit is to encourage low-income workers to save for retirement, and it stacks with the EITC—you can claim both in the same year if you meet the requirements for each.

How SSDI Income Affects Tax Credit Calculations

SSDI benefits do not count as income for tax purposes, and they do not count toward the income limits for any tax credit. This is a major advantage: your SSDI payment stays off your tax return entirely. Only your earned income, unearned income (interest, dividends, pensions), and other taxable sources count.

For example, if you receive $1,200 per month in SSDI and earn $15,000 per year from part-time work, your income for EITC purposes is $15,000, not $29,400. This means you may may have access to for the EITC even though your total household resources are higher. The same applies to the Saver's Credit and the Child and Dependent Care Credit—SSDI does not reduce your may be able to access or the amount you can claim.

However, if you have a spouse who does not receive SSDI, their income does count. If you file jointly, your spouse's income is included in the household income for credit calculations. This can affect whether you may have access to or how much credit you receive.

Filing Your Tax Return and Claiming Credits

You file your federal tax return with the IRS using Form 1040, the standard individual income tax form. You can file on paper by mail or electronically using tax software or a tax preparer. If your income is below a certain threshold (which changes yearly), you may be able to file for free using IRS Free File software.

When you file, you report your earned income on Schedule C (if self-employed) or on the W-2 form your employer provides. You then claim any credits you are may have access to to on the appropriate schedules: Schedule EIC for the EITC, Form 2441 for the Child and Dependent Care Credit, and Form 8880 for the Saver's Credit. Tax software walks you through these questions and fills in the forms automatically.

You do not report your SSDI income on your tax return at all. Social Security sends you a Form SSA-1099 each January showing your SSDI benefits, but this form is for your records only—you do not attach it to your return or report the amount to the IRS. Keep the SSA-1099 in your files in case the IRS has questions, but it does not affect your tax filing.

File your return by April 15 each year (or the next business day if April 15 falls on a weekend). If you are owed a refund, filing earlier means you receive it sooner. If you owe tax, filing by the important date avoids penalties and interest.

When You Should File Even If You Owe No Tax

If you have earned income but your income is low enough that you owe no federal income tax, you should still file a return to claim the EITC. The EITC is refundable, so even if you owe zero tax, the IRS will send you the credit amount as a refund. This can mean hundreds or thousands of dollars in your bank account.

For example, if you earned $12,000 in 2024 as a single filer with no dependents, you would owe no income tax. But you could claim the EITC and receive a refund of several hundred dollars. If you did not file, you would miss that money entirely. The IRS does not automatically send the EITC; you must claim it on your return.

The same applies if you have a dependent and your income is low. Filing takes an hour or two (or is free through tax software), and the refund can be substantial. Many SSDI recipients who work part-time benefit significantly from filing, even when they owe no tax.

Frequently Asked Questions

Does claiming a tax credit reduce my SSDI benefits?

No. Tax credits are between you and the IRS and do not affect your SSDI payment. Your Social Security benefits are determined by your work history and age, not by your tax return or tax credits. You can claim every credit you are may have access to to without risking your SSDI.

Can I claim the EITC if I work part-time while on SSDI?

Yes. Your SSDI income does not count toward the EITC income limit, so only your wages count. If your wages are below the limit for your filing status and family size, you can claim the credit. Many part-time workers on SSDI may have access to for the EITC.

What if I have a spouse who works but does not receive SSDI?

If you file jointly, your spouse's income is included in the household income for tax credit purposes. Your SSDI does not count, but your spouse's wages do. You may still may have access to for credits depending on your spouse's income and your family situation. Consult a tax preparer if you are unsure whether filing jointly or separately is better for your situation.

Do I need to report my SSDI income on my tax return?

No. SSDI benefits are not taxable income. You receive a Form SSA-1099 showing your benefits, but you do not report it to the IRS or attach it to your return. Keep it for your records, but it does not go on your tax form.

Where can I get help filing my tax return and claiming credits?

The IRS offers free tax preparation through IRS Free File if your income is below the threshold. Many nonprofits and community centers also offer free tax help through the Volunteer Income Tax information (VITA) program. You can find a VITA site near you at irs.gov. A tax preparer or CPA can also file your return for a fee.