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Are Social Security Disability benefits included in gross income?

With the start of a new year, there is one fast-approaching date on the minds of many people in Los Angeles and throughout the state and country: the tax filing deadline. Over the next couple of months, we will write several blog posts on the tax implications of Social Security Disability, Supplemental Security Income and other Social Security benefits. With this, we will hopefully help you ensure that you do not run into any surprises when you file your state and federal income taxes in April.

One of the most common tax questions regarding SSD and other benefits is this: Are my Social Security benefits considered gross income? And the answer, unfortunately, is this: It depends largely on which type of benefits you are receiving.

For example, Supplemental Security Income is not taxable, and is therefore not considered part of your gross income. Social Security Disability benefits and Social Security retirement benefits, on the other hand, are taxable and part of gross income if certain requirements are met.

In general, some of these Social Security benefits are taxable when half of the benefits plus all other income you earned during the year is greater than a specified base tax amount. This base amount will be determined largely by your marital status and whether you are filing joint or solo.

If disability benefits are in the form of a pension, they will probably be taxable as wages if you are not yet retired, and taxable as a pension after the age of retirement. Workers compensation benefits are generally not taxable.

Clearly, there are too many variables to detail every possible situation here. If you are not sure whether your Social Security Disability benefits are taxable, it may be beneficial to contact a tax professional.

Source: OregonLive.com, "Are these benefits included in gross income?" Richard Panick, Jan. 25, 2012

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