Some Tax Related Questions


After you register for Social Security to enable you to be considered for obtaining disability benefits, you may or may not be required by US law to pay yearly Social Security taxes based on your relevant annual earnings. Some important relevant questions in regard to the taxation aspects of Social Security benefits that may be hovering in your mind are answered below.

Does US government levy any kind of income tax on Social Security benefits?


You need to pay income tax on your Social Security benefits only if your total income as an individual is more than $25,000. In case you file a federal tax return jointly with your spouse as a couple, the relevant income threshold for the purpose is $32,000.

As far as the issue of taxes on your Social Security disability benefits are concerned that depends on the local and state tax laws applicable for the location in which you reside. So you need to contact the relevant authorities. However, some local and state tax authorities do not levy taxes on your Social Security tax benefits.

When were the Social Security Benefit Statements (SSA-1009) for the tax year 2008 mailed?

This was completed by 31st January, 2009. If you want a duplicate statement you can make a request for it.

What is the breakup of the changes for tax year 2009 in respect of COLA (cost-of-living adjustment in tax, benefit, and earning) amounts?

COLA has increased by 5.8% for tax year 2009. The relevant announcement was made by Social Security Administration (SSA) on October 16, 2008.

The tax rate for 2009 for employed and self-employed individuals remains the same as was applicable for the tax year 2008. That for employed persons is 7.65% and that for self-employed ones is static at 15.30%. The tax rate includes that for the purpose of Medicare.

As far as the maximum taxable earnings are concerned the Social Security Disability Benefits Income (QUASDI) is increased to $106,800 in the tax year 2009 from $102,000 in tax year 2008. The Medicare portion still has no limit.

The Quarter of Coverage (QC) amount is increased to $1,090 for tax year 2009 from $1,050 in tax year 2008. The under full retirement age Retirement Earnings Test Exempt Amounts (RTEA) are increased to $14,160 per year ($1,180 per month) for tax year 2009. It stood at $13,560 per year ($1,130 per month) for tax year 2008. Above the above applicable limit, 1 dollar in benefits will be withheld in respect of every 2 dollars earned over and above the limit.

The Substantial Gainful Activity (SGA) threshold stands increased to $980 per month for tax year 2009 in respect of non-blind disabled individuals. It was $940 per month in the just prior tax year. The SGA threshold stands increased to $1,640 per month for tax year 2009 in respect of blind individuals. It stood at $1,570 per month for the tax year 2008. The TWP (Trial Work Period) threshold stands at $700 per month for tax year 2009. It was $570 per month in the just prior tax year.

For an employee retiring at full retirement age, the maximum Social Security benefits are limited to $2,323 per month for the tax year 2009. This limit stood at $2,185 per month for tax year 2008.