By: Passalacqua & Associates

Is SSDI Taxable in New York State?

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What is SSDI?

SSDI (Social Security Disability Insurance) pays cash benefits to disabled workers, but if you’re disabled, you may need help from a Syracuse disability benefits attorney in order to prove that you are entitled to SSDI benefits.

What is SSDI, how does it work, and who qualifies for benefits? Are SSDI benefits taxable by the IRS or the State of New York? When should you contact a Syracuse SSDI lawyer? If you’ll continue reading this brief discussion of SSDI benefits, you will find the answers you may need.

Through pesonal payroll tax contributions, more than 150 million working people in the U.S. are covered by SSDI if they suffer a serious, long-term, or lifelong disability.

Who is Eligible?

Applying and qualifying for SSDI benefits can be quite complicated. Your employment history must include jobs where you paid Social Security taxes for certain lengths of time, and you also must meet the Social Security Administration’s definition of “disabled.” SSDI applicants must:

  1.  suffer a severe and medically demonstrable physical or mental impairment that is anticipated to last at least twelve months (or to cause death)
  2. have worked for a quarter or more of their adult lives and for at least five of the previous ten years
  3.  be unable to do the same type of work that they have done for the previous fifteen years
  4.  be unable to work any potential job, even outside of your previous experience, that pays at least $1,470 a month (for most disabled workers) or $2,460 a month (if you are legally blind)

A Syracuse disability benefits attorney can help you determine if you qualify for SSDI benefits and will guide you through the application process. If your first application for SSDI benefits is denied, you should file an appeal with help from a disability benefits attorney.

How Are SSDI Benefits Taxed?

Social Security Disability Insurance benefits are taxable, although you may pay no taxes if you have little or no other income. A percentage of your SSDI benefits is subject to taxation if:

  1. You are single and you have over $25,000 a year in income.
  2. You are married, file jointly, and as a couple have over $32,000 a year in income.

The portion of your SSDI benefits that is subject to taxation depends on your income. For SSDI recipients who are single, if your income is:

  1. below $25,000 a year, the percentage of your benefits that is taxable is zero
  2. from $25,000 to $34,000 a year, 50% of your benefits are taxable
  3. over $34,000 a year, 85% of your benefits are taxable

For SSDI recipients who are married and file jointly, if your income is:

  1. below $32,000 a year, the percentage of your benefits that is taxable is zero
  2. from $32,000 to $44,000 a year, 50% of your benefits are taxable
  3. over $44,000 a year, 85% of your benefits are taxable

These figures apply only to federal taxes paid to the IRS. Unlike some states, the State of New York does not tax Social Security Disability Insurance benefits.

Are SSDI Back Payments Taxed?

The first payment for most SSDI recipients is a lump sum payment for those months when the applicant hadn’t yet been approved for benefits. That lump sum can increase your income for that year and may cause you to lose a larger percentage of your SSDI benefits to income taxes.

However, the Internal Revenue Service allows you to apply SSDI benefits owed to you in a prior year to that year’s tax return – which you may need to revise – thus reducing your income for the year you receive the lump sum payment.

A Syracuse SSDI lawyer can answer your questions and address your concerns regarding the taxes on your SSDI benefits.

What if Your Disability is Temporary?

SSDI benefits are not available for a short-term or partial disability. Temporary disabilities are covered by workers’ compensation in the State of New York, and you may also have private disability insurance that you’ve purchased directly or through an employer’s insurance plan.

If you receive workers’ compensation benefits along with SSDI payments, the taxes can quickly become quite complicated, so don’t hesitate to seek advice from an SSDI attorney.

Similarly, if you’re receiving short-term disability insurance benefits, you may want to speak with a disability benefits attorney to make sure that you are not paying any taxes unnecessarily.

What if Your Application for SSDI Benefits is Rejected?

A disabled worker’s first application for SSDI benefits is seldom approved. Don’t give up, because a denial of SSDI benefits is only the beginning of the process. If you give up, you may have to file again after several years, and you’ll have to start from scratch.

If your first application for SSDI benefits is rejected, it’s better to appeal that decision immediately with help from a disability benefits attorney in the Syracuse area.

The deadline for an appeal is sixty days from the date your application is denied, but you must act at once because a disability benefits attorney needs time to prepare an appeal. The process for SSDI appeals is complicated, but it gives you several more opportunities to obtain SSDI benefits.

What Steps Should You Take?

While a disability benefits lawyer will help you appeal a denial of SSDI benefits, the smarter strategy is to have an attorney’s advice even before you submit your first application.

That will ensure that your application is complete, accurate, and meets the Social Security Administration’s deadlines. Your attorney will also ensure that there are no mistakes or misunderstandings on your end that could delay the process or the payment of your benefits.

If you are disabled, qualified for benefits, and you haven’t applied for SSDI, contact a Social Security disability attorney to help you with your first application.

If You Do Not Qualify for SSDI

If you do not qualify for Social Security Disability Insurance, you may be eligible for SSI (Supplemental Security Income). A disability benefits lawyer can explain the SSI program to you and help you obtain those benefits if you qualify.

If you are disabled and need benefits, make the call to a disability benefits lawyer today. Every day you wait is a day that you are not receiving the benefits you may be entitled to by law.