Do I have to Pay Taxes on My Lump-Sum back payment of Social Security Disability Payments?

Social security disability payments can be a great relief to one’s personal grievances and can therefore have considerable positive benefits for the recipient. There are numerous forms in which these payments can be disbursed, including recurring payments (every week or month), time-line payments (with an even more unique and organized schedule), and lump-sum payments. The strategies employed for optimizing the amount of money you keep can be explained to you by an attorney for social security disability. This article will focus on the last option; the lump-sum disability payment. Specifically, the social security lump-sum disability payment is a one-time disbursement for benefits that the recipient is entitled to for the prior year benefits. This brings up an important question. Do I need to pay taxes on this payment? If so, how much and how does it work?

Criteria for tax payments

Whether you pay taxes and the amount of taxes you will pay on this income will depend on numerous factors, including but not limited to, the number of previous deductions you’ve made on your income for the prior year. First of all, it is important to note that most people who receive monthly social security payments as their only source of income will not be obliged to pay taxes on those amounts. However, a recipient who reports a lump-sum payment as their annual income may have to owe taxes in some shape or form. Specifically, the rules from the Internal Revenue Service (IRS) state that a federal income tax return must be filed if the recipient’s gross income is over a certain amount. It is important to remember that each person’s individual tax owing amount will depend on their own unique circumstances. However, the general guideline is that if the recipient makes over $25,000 to $34,000 a year, the income tax owed can accumulate up to 50% of the total benefits. An attorney for social security disability can better help you understand these guidelines and help you receive the outcome you desire.

The IRS Publication 915 Worksheets

Some recipients conclude that it will be an advantage for them to claim all of their lump-sum payment for the previous year (described in the paragraph above), while other recipients decide to use the IRS worksheet in order to spread it over pervious tax years. The worksheets provided in a document titled ‘IRS Publication 915’ can be used to determine the taxable portion you owe to the government agency. Specifically, you will see the amount included in Box 3 of Form SSA – 1099 (which you will receive from the Social Security Administration).

Find an Attorney for Social Security Disability

Overall, there are two main strategies that disability recipients use to organize the payment of their tax returns for the previous year. One strategy involves simply paying up to 50% of their total benefits for a pervious year income of $25,000 to $34,000 (more than this income may result in up to 85% of the income being taxed!). The other strategy involves using the IRS Publication 915 worksheets, which are provided to the recipients by the Social Security Administration. In conclusion, it is very important to remember that these are complicated tax strategies, therefore in order to receive the best outcome, you should look for an appropriate attorney for social security disability.

Americans Can Receive Up to $3,011/per month
in Disability Benefits

100% FREE and Confidential

Get the Benefits that you deserve!

100% Risk Free

See if You Qualify

After submitting an attorney will contact you promptly!

1Case History
2Case Details

A Proud Sponsor of:

Social Security Lawyer near me
“I was so relieved that I could collect enough to take care of my bills. Can’t thank you enough!”
Randy V.
San Diego, CA
“Thank you for making a tough situation less difficult. Just a few clicks and I was able to start getting disability benefits!”
Megan R.
Boston, MA
Legal Campaign Disclaimer: (the “Site”) is not a law firm and not a lawyer referral service; nor is it a substitute for hiring an attorney or law firm. Any information displayed or provided on the Site is for personal use only. This Site offers no legal, business, or tax advice, recommendations, mediation or counseling in connection with any legal matter, under any circumstances, and nothing we do and no element of the Site or the Site’s call connect functionality (“Call Service”) should be construed as such. Some of the attorneys, law firms and legal service providers (collectively, “Third Party Legal Professionals”) are accessible via the Call Service by virtue of their payment of a fee to promote their respective services to users of the Call Service and should be considered as advertising. This Site does not endorse or recommend any participating Third-Party Legal Professionals. Your use of the Site or Call Service is not intended to create, and any information submitted to the Site and/or any electronic or other communication sent to the Site will not create a contract for representation or an attorney-client relationship between you and these Site or any of the Third Party Legal Professionals.
social security disability attorney near me
Free Case Evaluation’s team is dedicated to help any injured US Citizen or eligible resident receive maximum compensation for their injury.

Call Us Anytime: 1 (484) 857-1914