Is a Social Security Lump Sum Payment Taxable?
03/21/2013 // San Antonio, Texas , US // Wright Disability Firm // Wright & Wright // (press release)
Social Security Disability (SSDI) benefits are often approved for eligible applicants many months and in some cases years after they have applied. The time frame often depends on their circumstances, which may include having to go through the appeals process for an initial denial. Even after approval, some recipients are not issued their first payment for an extended period following receipt of notice that they have been approved, which means many receive a lump sum back payment.
Those receiving Social Security Disability payments may have questions regarding the taxes potentially owed on what they receive, particularly with regard to the lump sum back payment and how it should be calculated. It is recommended that individuals speak with a qualified professional who can help them assess what taxes may be owed in connection with their disability payments. Social Security beneficiaries are not penalized by the IRS for receipt of back payments all in one year, and can make arrangements to take care of their tax liability in accordance with IRS provisions concerning these sums.
In determining whether one may owe federal income tax for Social Security Disability a number of factors may affect the outcome, including whether one files jointly or individually, the total amount of their provisional income, and whether they have additional earnings combined with their Social Security payments. Again, a tax professional can help those with questions about their tax liability in these cases.
The Social Security Disability advocates of Wright & Wright, America’s Social Security Disability Firm? are available to help those who need help filing a claim for Social Security benefits or have questions about the process. Individuals may contact the firm today to request a free consultation about their case.
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