Expected taxes from SSDI (disability) income??

Mollykazoo

Hello,

My husband is 56, diagnosed with EO Alzheimer's in November of '23 (at age 55), but showed obvious signs of decline beginning at about age 52-53.

I'm so relieved that he was approved for SSDI in October (5 months after applying) and we will receive his first disability check this month. It will come RIGHT as his catastrophic leave from his university job runs dry. I am very relieved. Also, our 12-year-old daughter was approved to receive auxiliary benefits, as his dependent child. The combination of these two payments is roughly equal to the NET income (after taxes) my husband was earning at his last job.

One other wild card is that we have a 22 year old daughter who was diagnosed with autism at age 20. She struggles to work because her executive functioning is very poor but she's just begun her first semester of college. She is fully financially dependent on us and I'm hoping she will also be accepted to receive auxiliary SSDI benefits (drawing from her dad's years of employment). She has a phone appointment this Friday to officially apply.

I've read that, unless our combined income is below $30,000/year, the SSDI payments will be taxed. Our combined income is above that threshold. I will need to continue to work in order for us to pay our bills but I'm concerned about how taxes will cut into the SSDI payments.

I've already sent a message to my accountant with this question but no response yet and I find that folks on this forum are often more knowledgeable than professionals because you all have lived the very specific nightmare I'm currently navigating.

Can anyone share personal experience with this? Any insights?

I'm so nervous that we will just not be able to make ends meet!

thank you!

Molly

blacksparky

I believe that if you are over the threshold, you will be taxed on 85% of your SSDI.

PlentyQuiet

the formula to determine tax liability is 1/2 SSDI + all other taxable income. If that is above $32,000 then there will be some tax liability. You can use the IRS tool to help you estimate it:

https://www.irs.gov/help/ita/are-my-social-security-or-railroad-retirement-tier-i-benefits-taxable

Quilting brings calm

You may probably be in a lower tax bracket than So your taxes should be less than they were. However there will be some, so your net income will be somewhat less than what it was previously.

The 85% is for people with a good amount of other income. Unless you are working too, it doesn’t sound like your family will be at the 85% level.

I would also ask if your 12 year old daughter’s income is taxed under your taxes or on her own tax return. You need to investigate what her income can be used for.

Victoriaredux

With college, special needs, and your husband maybe needing in home or placement care down the road seeing an elder law attorney would be worth the money or maybe there are pro bono options for one in your area.

Better to spend a little on a lawyer to maximize income & help for your kids then worry about the tax rates.

Play offense, not defense.

Also, if his SSDI grant has some backdating this year's income may be higher due to the catch up. so plan your 2024 withholdings carefully to avoid any underpayment. Your accountant should help with that .

Mollykazoo

Thank you all for your helpful comments.

You're reminding me why I am so grateful that accountants exist! But, you've all shared some good information with me. I feel like I'm starting to wrap my head around it. There are so many things up in the air right now. In addition to all the upheaval due to my husband's early retirement and illness, MY job will end in early 2025 (a 50-year-old family business is shutting its doors) and I will need to find new work.

We have already had a CELA create a trust for us, recreate our wills, POAs and medical POAs.

Just keeping my fingers crossed that my 22-year-old will also be eligible for auxiliary benefits because that will help a lot.

thanks so much for being a community of helpful voices!

Victoriaredux

For sure have your 22 yo keep the phone interview but :

https://hdsa.org/disability-tips/understanding-auxiliary-benefits/

https://jandils.com/blog/auxiliary-benefits-work-social-security/ For a child to receive auxiliary benefits, they must be a minor (under 18), be found completely disabled before turning 22, or be a high school student under the age of 19.

And the actual SSA handbook:

https://www.ssa.gov/OP_Home/handbook/handbook.03/handbook-0323.html

https://www.ssa.gov/OP_Home/handbook/handbook.03/handbook-0342.html

Sending a private message with more ideas.