If you’re receiving Social Security Disability Insurance or Supplemental Security Income benefits from the federal government, the great news is that you probably will not need to pay any taxes on those benefits. While both SSD and SSI benefits are legally subject to taxation, the vast majority of people receiving them don’t end up owing any taxes.
That doesn’t mean you should ignore tax time, though. The IRS would like all people with disabilities to know that there are a number of tax deductions and credits that you might be entitled to receive. While this blog post is not meant to be tax advice, here are a few programs the IRS has for those finding it hard to make ends meet due to a physical or mental disability:
Most people with disabilities and parents of a disabled children are eligible for the Earned Income Tax Credit. This is available to most people with disabilities who are over 24 but under 65, as well as retired people who receive retirement or disability benefits through a former employer. Those employer benefits qualify as earned income for the purpose of this credit. Because this is a tax credit, it may even result in a tax refund — and any refund won’t count against your eligibility for Social Security disability or Medicaid and typically won’t affect your eligibility for other income-based benefits.
Blind or visually impaired? If you are, you could be entitled to a higher standard deduction than other taxpayers.
Totally and permanently disabled from work? You may qualify for a tax credit called the “Credit or the Elderly or Disabled.”
Working part time with a disability? Business expenses for items that are necessary for you to be able to work are typically tax-deductible.
Uncovered medical or dental expenses? If you have paid for substantial medical or dental costs yourself, you may lower your tax bill by itemizing these deductions.
Paying someone to care for a disabled family member so you can work? You could be eligible for the Child or Dependent Care Credit.
If you’re wondering about the circumstances under which your SSD or SSI benefits could be taxed, take a look at the back of one of your benefit statements. The Social Security Administration prints the IRS’s Notice 703, which can help you determine if your benefits could be taxable.
- Clarksville Online, “Tax Benefits for Disabled Taxpayers,” March 5, 2013
- SSA.gov, “Paying income tax on Social Security benefits,” Aug. 3, 2012