Discussion Archives:Social Security Disability Taxability

From TaxAlmanac, A Free Online Resource for Tax Professionals
Note: You are using this website at your own risk, subject to our Disclaimer and Website Use and Contribution Terms.

From TaxAlmanac

Jump to: navigation, search

Discussion Forum Index --> Consumer Questions --> Social Security Disability Taxability


Studbob (talk|edits) said:

3 December 2005
Taxpayer is totally disabled due to loss of kidney. He is receiving Social Security disability & union disability. IRC section 105(c) states that if taxpayer is permanently or totally disabled due loss of body part or body function, then disability is not taxable. In 2001 tax return was filed showing payments as non taxable and IRS accepted it. In 2002-2004 they will not accept SSA disability payments as non taxable.

Does anyone have experience with SSA disability and taxability?

Pjs (talk|edits) said:

3 December 2005
Taxable; payments to disabled taxpayer are reported to him/her on Social Security 1099 form.

Would/might be different if payments were from a private insurer.

MEJungman (talk|edits) said:

3 December 2005
Pjs is correct. IRS 105(c) refers to private disability benefits. All social security benefits are potentially taxable (to a maximum of 85% of the benefits). You need to use the worksheet on page 28 of the Form 1040 instructions (downloadable here) to calculate how much of the benefits are taxable. It's possible that none of the benefits are taxable, but you need to compute the amount anyway. But the taxpayer might also be able to claim the Credit for the Elderly or the Disabled.

Rlw (talk|edits) said:

4 December 2005
Perhaps this is off topic, but I'm having trouble accepting the premise that loss of a kidney causes total disability.

There are plenty of people walking around with one kidney or no kidneys at all. In the former case, the individual is not disabled; he has another functional kidney. In the latter case, the individual requires dialysis while waiting for a transplant. This patient is not disabled, but does need frequent medical attention (dialysis several times a week, plus tests for tissue compatibility).

Is there something more to this case, or to tax law, which truly renders the taxpayer disabled in the eyes of the SSA and IRS?

Txguy (talk|edits) said:

30 January 2007
What about if the Social Security benefit is being pay to the dependents? it this taxable

Deback (talk|edits) said:

January 30, 2007
Dependents' SS benefits are not taxable to the parents on the Federal return. In Michigan, though, the dependents' SS benefits have to be included in Household Income on the Homestead Property Tax Credit form.

Txguy (talk|edits) said:

30 January 2007
Thanks for your help Deback, what section of the IRS Can I found this?

Deback (talk|edits) said:

January 30, 2007
You can click on Social Security Benefits below to find the IRS publication, or you can click here: Publication 915. Search the publication for "child".

JR1 (talk|edits) said:

January 30, 2007
I, too, am stunned to see that this qualifies for disability settlement. Stunned. My mom, who is now 72 and STILL WORKING! has been without one for several years now. Maybe I should send her down to the SSA office.

But yes, it's taxable.

Taxcpa (talk|edits) said:

18 March 2007
Father died and child (age 10) received Social Security Income. Is it taxable to the mother or child?

Kevinh5 (talk|edits) said:

18 March 2007
Try reading Publication 17 or looking online at ssa.gov. Also, this thread is about Social Security Disability benefits.

Oklatex (talk|edits) said:

1 December 2007
My understanding is that Social Security disability payments are not taxable, unless the spose's taxable income reaches a certain level. What happens when the spouses income is non taxable (workman's compensation)? We were told the Social security was non-taxable and we were told the workman's compensation was non-taxable. In a household of four, is there a tax liability in this case. SS equals approximately 18,000.00 and workmen's comp is a little over 31,000.00.

Thanks for any help offered. Oklatex

Johnhuddleston (talk|edits) said:

1 December 2007
Most of these things (phase outs and taxability based on income) are based on AGI or modified AGI. Nontaxable income is not going to raise your AGI to make the social security taxable.

John Huddleston

Kevinh5 (talk|edits) said:

1 December 2007
Okla, who is "we"? Are you a tax professional?

Mscash (talk|edits) said:

1 December 2007
There have been Tax Court cases on this issue. The Social Security benefits are taxable even if they replace non-taxable workers comp payments.

Johnhuddleston (talk|edits) said:

1 December 2007
Life is so unfair sometimes.

John Huddleston

Dennis (talk|edits) said:

1 December 2007
I think the question was actually whether non-taxable workers' comp would count in the equation used to compute the portion of social security benefits taxed. I don't think so. ♫

Death&Taxes (talk|edits) said:

1 December 2007
That is how I read it too, Dennis. Only any income on Line 8b plus the foreign income exclusion and foreign housing benefit must be added back when computing the taxable social security.

Question: Is Social Security taxable? Answer: It depends.

btw: here is another area where income levels for inclusion have not been changed since it came into law in 1981.

Personal tools