I have been unable to work due to serious illness, but fortunately my husband is employed. We live off of his income as well as my social security disability income (which I contributed to during my years of employment). Unfortunately, we did not set money aside to pay taxes on the disability income, and now are worried about a big tax hit we can’t afford. Will it help if we file “married filing separately” rather than “married filing jointly”?
2 responses so far ↓
1 financegal27
No in most cases Social Security benefits are not taxable. Check out the link below for the specifics on your particular situation.
2 bostonianinmo
In your situation, up to 85% of your SSDI may be taxable. If 1/2 of your Social Security benefits plus ALL other income on your joint return are greater than $32,000 then up to 85% of your SS benefits may be taxable.
Married Filing Separately will probaby cost you more. Your base amount for tax purposes will drop from $32,000 to $0 on a separate return. This would make your SS benefits fully taxable. You’ll also lose out on other tax benefits of a joint return.
See IRS Pub 915 for complete information on the taxability of your SS benefits. Here’s a link:
You may wish to start having income tax withheld from your SS benefits if you are in a tax debt situation this year.