Need to learn how to file taxes if on disability? If so, follow these instructions to ensure that you do not overpay. You will learn how to determine if your disability taxes are taxable, determine your eligibility for earned income credit, and see if you are eligible for the disability tax credit.
- Learn if your disability payments are taxable. If you receive disability insurance payments from a plan in which your previous employer made premium contributions, then these payments are taxable. If you are receiving Social Security disability payments for a child, or SSI, these payments are not taxable. If you are receiving Social Security disability payments for yourself, some of your benefits may be taxable. Add one half of your Social Security disability benefits to all other income, including tax-exempt interest. If this totals more than $25,000 for single, head of household, qualifying widower or married-filing-separately, then a portion of it is taxable. For taxpayers that are married and filing jointly, the total must exceed $32,000 to be taxable. All amounts are taxable for those filing with the status of married, but filing separately.
- Determine your eligibility for earned income credit. If you are disabled and receiving benefits, your disability payments are considered earned income up until the time you would have retired. Because these payments are considered earned income, that can be used when calculating earned income credit. Earned income credit is a refundable credit, and if you meet all the requirements you could be owed money by the IRS. Children with disabilities, who are permanently disabled, can be claimed by their parents for the purpose of earned income credit at any age.
- Reduce your tax liability with the disability tax credit. If you recently stopped working, or are married, the disability tax credit will help to reduce your tax liability. It is not a refundable credit, so you will not receive a refund. However, if you have a tax liability because you, or your spouse, were working part of the year and you meet certain qualifications, it will reduce the taxes you owe. These include being are a citizen or a resident alien with a green card, being under 65 prior to December 31 of the tax year, being retired with a permanent disability and more.
Learning how to file taxes if on disability will reduce your liability and might get you a refund. Don't overpay because you don't know the tax law.
What Others Are Reading Right Now.
Acting, comedy and strong spirits converge in Speakeasy. When host Russell Peters interviews entertainers about all sorts of topics, neither the drinks nor the conversation is wate …
6 Things You Think Your Girlfriend Cares About But She Doesn...
Guys, it may be time to refocus your efforts.
10 Red Flags That Kill Your Chances With Women
Wondering why that first date didn’t lead to a second? Read on.