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Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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My husband is drawing social security disability, 72T, and

Resolved Question:

My husband is drawing social security disability, 72T, and his retirement pension. We were told today that since he is disable he should not be paying taxes on these. If this is so what form do we need to correct this and not pay taxes in the future?

Submitted: 7 years ago.
Category: Tax
Expert:  Merlo replied 7 years ago.
Hello rkbeaux,

Disability income is not automatically exempt from tax.

If someone is out of work and receiving short term or long term disability payments, those payments might be non-taxable, depending on who paid the premiums for the disability insurance coverage. If the premiums were paid the person's employer they are subject to tax. If the worker paid the premiums with after tax dollars, then the disability payments would not be taxable.

However, the types of payments you listed do not appear to fall in this category.

SS disability is not treated any differently than regular SS benefits as far as tax is concerned. When you receive SS benefits, those benefits by themselves are not subject to tax, unless you have income from other sources, and that income exceeds a certain amount. There is an actual worksheet which you must fill out in order to determine just how much, if any, of your SS benefits are subject to tax.

Regular retirement benefits that your husband receives from his former employer are fully taxable. The payments from the 72T plan I assume are coming from an IRA account or similar tax deferred plan. And if that is the case, those payments are also fully subject to tax, as none of the money in that account has ever been tax paid.

I suppose the botXXXXX XXXXXne is that being disabled is not what determines if your income is taxable, as there is no exception to paying taxes for a disabled person. What really determines if your income is taxable is the type of income you are receiving and the amounts.

If this was helpful please press the Accept button.

Thank you rkbeaux, and let me know if you have more questions. I am happy to help you with whatever I can.

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