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Lev
Lev, Tax Advisor
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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: 4 years ago.
Category: Tax
Expert:  Lev replied 4 years ago.

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

Please verify...

Customer: replied 4 years ago.
This was from social security disability. I was declared disabled.
Expert:  Lev replied 4 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 4 years ago.
What if I'm married and my spouse has an income of $60.000.
Expert:  Lev replied 4 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, Tax Advisor
Category: Tax
Satisfied Customers: 22749
Experience: Taxes, Immigration, Labor Relations
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