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Will You Owe IRS if You Receive Social Security Benefits

Author: Disability Group Inc.

Published: 2011-02-08

Synopsis and Key Points:

With tax season upon us many are wondering are Social Security disability benefits taxable and how much is taxable.

Main Digest

Taxing Disability Benefits: Will You Owe IRS if You Receive Social Security Benefits

Millions of Americans received Social Security disability benefits in 2010, and many benefit from private insurance policies. With tax season upon us, many are wondering - "are disability benefits taxable" "How much is taxable" "Does repayment to a private insurance carrier factor into tax liability"

Social Security Benefits ARE Taxable

If earnings - including benefits - are beyond a calculated base amount, then a portion of Social Security disability benefits will be taxed. The base amount takes into consideration all the forms of income that are received and may be calculated by filling out the IRS' Social Security and Equivalent Railroad Retirement Benefits Form 915 (

The following base amounts can be used as a "quick determination" to see if your benefits are taxable:

$25,000 if single, the head of household, or a qualifying widow or widower with a dependent child.

$25,000 if married but filing separately and did not live with spouse at any time during the tax year.

$32,000 if married and filing jointly with spouse.

$0 if married but filing separately and lived with spouse at any time during the tax year.

Any amount above the base amounts for each category will be taxable by the IRS.

What Can the IRS Legally Take Out of Your Social Security Benefits

Generally, up to 50% of disability benefits will be taxable. This will vary based on how much was earned in 2010.

Up to 85% of benefits may be taxable if either of the following applies:

All earnings plus half of benefits total more than $34,000 (or $44,000 if married and filing jointly).

Married but filing separately and lived with your spouse at any time during the tax year.

Repayment to Private Insurance Carriers and Other Deductions

Some folks used SSA lump sum payments to repay private disability payments from an employer or insurance company. If this is the case, an itemized deduction can be taken so long as the repayment was not more than $3,000. If it was over $3,000, a tax credit may be claimed instead.

Additionally, you may also be able to deduct certain legal expenses. Expenses incurred in connection with the determination, collection, or refund of any tax, and in certain other tax-related circumstances, might be deductible.

For more information, speak to your representative or refer to Form 915 for additional details and specific examples. Remember to consult a tax professional as the above are basic guidelines and are not to be construed as tax advice.

Disability Group Inc.

Disability Group, Inc. ( is currently the largest Social Security Disability Law Firm in the U.S., handling Social Security disability cases nationwide. The mission of Disability Group Inc., is to secure benefits for disabled Americans in an environment of dignity and respect. In 2009, the firm was nominated on the prestigious Inc 500 list as one of the fastest growing privately owned companies in America.

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