Baltimore Social Security Disability Lawyers: Taxes and Disability BenefitsNovember 10, 2016
When it comes to disability benefits, the type of benefits that you are collecting will determine whether they are taxable or tax free. How your disability benefits are taxed depend on who makes the payment and the deductibility of the premium payments.
There are several types of disability insurance policies, including the ones listed below.
- Private Disability Insurance Policies: Benefits are tax free because premiums are made using after-tax dollars and are ineligible as a medical deduction on a tax return.
- Employer-Provided Insurance: If the individual pays for insurance using after-tax money, disability benefits are tax free. However, the benefits would be fully taxable if the employee pays for the premiums using pre-tax money.
- Government-Provided Disability Benefits: Benefits received under the Supplemental Security Income (SSI) program are always tax free. However, if you receive benefits under the Social Security Disability Insurance (SSDI) program, a percentage of your benefits may be taxable. Approximately one third of those collecting SSDI benefits owe taxes on a portion of their benefits because they make too much money relative to IRS thresholds.
You can determine what portion of your Social Security disability benefits is likely to be taxable by referring to a report published by the IRS, which provides base amounts used to determine how much you will be taxed. For 2016, the base amount for single filers is $25,000 and $32,000 for married couple who file jointly. To calculate the taxability of SSDI benefits, refer to lines 20a and 20b of your tax return.
Baltimore Social Security Disability Lawyers at LeViness, Tolzman & Hamilton Help Clients Secure the Benefits They Deserve
If you have questions or are confused about any aspect of your Social Security Disability benefits, we are here to help. The dedicated Baltimore Social Security disability lawyers at LeViness, Tolzman & Hamilton will address all of your concerns, including whether your benefits are taxable or not. We will pursue the maximum allowable benefits that you deserve. To schedule a free consultation, call us today at 800-547-4LAW (4529) or contact us online.
Our offices are located in Baltimore, Columbia, Glen Burnie, and Towson, allowing us to assist those who have been denied Social Security benefits throughout Maryland, including those in Anne Arundel County, Carroll County, Harford County, Howard County, Montgomery County, Maryland’s Western Counties, Southern Maryland, and the Eastern Shore, as well as the communities of Catonsville, Essex, Halethorpe, Middle River, Rosedale, Gwynn Oak, Brooklandville, Dundalk, Pikesville, Parkville, Nottingham, Windsor Mill, Lutherville, Timonium, Sparrows Point, Ridgewood, and Elkridge.