It is easy to face confusion about taxes when it comes to Social Security Disability benefits. They seem like payments made to you for assistance and not income, which leads many people to think they are not taxable in any situation. However, this is not how the IRS looks at these benefits. They may still count as income in some situations.
The IRS explains that whether your SSD benefits are taxable depends on your total amount of income. There is a base earning amount limit. If you earn over this limit, then you do have to pay taxes on the benefits you receive.
The one situation where it is most likely that you will have to pay taxes on your benefits is if you have a spouse and you file a joint tax return. While you have a higher limit on how much you can earn, you have to count your spouse’s income. If your combined income is more than the limit, then you will have to pay taxes on your benefits.
The limit for your filing status may change. For 2019, the limits are $25,000 if you file single, qualifying widow or widower, married filing separately or head of household. Do note, if you file married filing separately but you lived with your spouse during the year, then your limit is zero. You only get the higher limit if you did not live with your spouse. For married couples filing jointly, the limit is $32,000.
One important part of the calculation is that you only have to count half of your benefits. So, you will add half of your benefits to all other income to see if you must pay taxes.