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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 28896
Experience:  Taxes, Immigration, Labor Relations
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I received $22,000 in a disability settlement, how much taxes

Resolved Question:

I received $22,000 in a disability settlement, how much taxes would i have to pay?
Submitted: 7 years ago.
Category: Tax
Expert:  Lev replied 7 years ago.

Is that disability settlement from social security? or from your employer? other?

Please verify...

Customer: replied 7 years ago.
This was from social security disability. I was declared disabled.
Expert:  Lev replied 7 years ago.

There is no taxes on social security benefits (including disability benefits) if your other taxable income plus half of social security benefits is less than $25,000 (assuming you are single).

 

So if you do not have any other taxable income - your social security disability benefits are not taxable.

 

Please consider this example - your other taxable income in 2009 is $10,000

so - $10,000 + $22,000/2 = $10,000 + $11,000 = $21,000 - that i s less than $25,000 - and none of your social security disability benefits are taxable.

 

Let me know if you need any help.

 

 

Customer: replied 7 years ago.
What if I'm married and my spouse has an income of $60.000.
Expert:  Lev replied 7 years ago.

In this case if you file jointly - the limit for married filing jointly is $32,000 - in your situation - 85% of your social security disability benefits are taxable.

You will report that income on the form 1040 - http://www.irs.gov/pub/irs-pdf/f1040.pdf

line 20a - $22,000

line 20b - $18,700 - that is your taxable amount which is 85% of $22,000.

 

If the amount you received is for some past years - the determination of taxability should be based on income from those years - but if you have same income level - there will not be any difference.

 

You may try to file as married filing separate - in this case only 50% of your benefits will be taxable - $11,000 and you will owe smaller tax amount, but your husband tax liability will be higher - so you would need to compare before making a decision about filing status.

Please provide the information above to your tax preparer for considerations.

Let me know if you need help in estimations.

 

Lev and other Tax Specialists are ready to help you