I was on disability for four months do I have to pay tax?
Hi,
The answer depends on the TYPE of disability program or policy.
If you were on social security disability, the percentage of SSDI that is taxed is based on something called COMBINED income:
Your adjusted gross income
+ Nontaxable interest
+ ½ of your Social Security benefits
= Your “combined income“
If you file your taxes as an individual, and your combined income is more than $25,000 per year but less than $34,000, you would have to pay taxes on about half the value of your benefits. If you are married and you file jointly, you can have a combined income of up to $32,000 before having to pay taxes on half your benefits.
If you are single and combined income is more than $34,000 (or married and make more than $44,000), 85% of your benefits could be taxed.
Now, on a disability POLICY (wither private or through work) then the taxation dependns on whether the premiums were paid on a pre-tax or post-tax basis.
Most work plans’ benefits are taxable because the employer took a deduction (as a business expense) for the premium paid.
Most private plans generate tax FREE income, because you pay that premium with AFTER-TAX ( you’ve already paid taxes on the income) dollars.
Hope this helps
Lane