Disability Tax Information
Information questions and answers regarding disability tax laws and rules for people with disabilities.
Recent new U.S. tax laws allow persons with disabilities to receive more favorable federal tax treatment. Individuals who receive Social Security disability insurance benefits may receive tax-free income if they meet certain eligibility criteria.
Taxed disability benefits do not include benefits received through the Social Security Administration as Supplement Security Income (SSI). SSI is provided on an as-needed basis to disabled indigents. However, Social Security Disability Insurance (SSDI) benefits are provided to individuals who have paid enough Social Security taxes to qualify for the SSDI program. SSI is provided to individuals who may not have worked and paid into the SSDI insurance pool. SSI is typically not taxable and not included as income.
If the only income you received during the tax year was your Social Security disability benefit, your benefit generally is not taxable and you probably do not have to file a tax return. If you have income in addition to your benefits, you may have to file a return even if none of your benefits are taxable. You should review IRS publication 915 and consult with your personal tax advisor.
Many expenses incurred during the course of your Social Security Disability claim are also tax deductable.
Examples Include:
- Medical costs incurred for examinations and reports
- Fee’s paid to doctors and hospitals
- Transportation and special assistance costs for travel to/from claim related destinations
Disability During Unemployment benefits are subject to federal income tax. You may voluntarily request to have 10% of your weekly benefits withheld. If you are interested in this service, refer to publication BC-103 (Taxation of Unemployment Benefits & Voluntary Tax Withholding) for additional information or contact the Disability During Unemployment Office
Social Security Disability benefits are never taxed on your state or city returns.
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