Taxes and Earning a Living: Working While on Social Security Disability

Receiving Social Security Disability (SSD) benefits from the federal government may be considered income depending on your financial status and whether you have other sources of income. These variables make it difficult to give a simple yes or no answer when our clients ask if they’ll owe taxes at the end of the year on their benefits. Fortunately, our Social Security Disability lawyers in Philadelphia have compiled a brief tutorial on the basics of filing during a year in which you received benefits for your injury or illness. Bear in mind, these aren’t permanent rules, and they’re subject to change. Always consult a seasoned tax professional before submitting your tax return in April.

Filing as an Individual

If you file your taxes as an individual – meaning you’re not married and filing separately – and your combined income from SSD benefits and any other taxable income is between $25,000 and $34,000, you have to pay taxes on 50 percent of your SSD benefits paid for that tax year. The bad news here is that if you’re combined income is greater than $34,000 you must pay taxes on 85 percent of your SSD benefits.  The Internal Revenue Service (IRS) may not require you to pay taxes on SSD benefits if your combined income is below the $25,000 mark.

Married and Filing a Joint Return

The IRS raises the combined income ceiling for you and your spouse if you file your annual income taxes together. If your combined income is between $32,000 and $44,000, you must pay income taxes on 50 percent of your SSD benefits. If your income is greater than $44,000, the IRS requires you to pay taxes on 85 percent of benefits received. Additional restrictions may apply depending on the tax year and any changes to the tax code. Our Philadelphia SSD lawyers can assist you in finding the experienced tax professionals to review your records and help you file correctly.

Working While on Social Security Disability

Maintaining even a modest work schedule when you’re in pain or ill can be next to impossible. If you’re able to continue employment after the Social Security Administration rules you permanently disabled, it could affect how much you receive in the way of disbursements each month. Obviously, if you can earn enough money to support yourself and your family, you’re not technically disabled in the eyes of the federal government. You can still earn up to a predetermined maximum amount of gross monthly income, and continue to receive monthly SSD payments.

The Trial Work Period

Wanting to return to work is a perfectly normal desire when an injury or illness has reduced your function capacity for more than a year. The Social Security Administration provides for a Trial Work Period (TWP) to encourage you to return to work without risk of losing your SSD benefits. You must work for at least nine months out of a 60-month period. In 2013, any month where you earn at least $750 counts towards the nine-month total for the TWP. Once you reach that nine-month benchmark, the Social Security Administration evaluates your claim, and determines if your benefits should cease. Your SSD benefits can resume within the following 36 months if you find you’re unable to work because the same injury or illness that previously rendered you disabled.

The world of Social Security Disability is a complicated place, and you shouldn’t have to navigate it alone. Contact our SSD attorneys in Philadelphia today to get straight answers to your questions. We can assist you in filing a claim for the first time or appealing one that the SSA has previously denied.