People understand that income is taxable on both the federal and state level. However, can your Social Security Disability benefits be taxed in Arkansas? The answer depends on what type of disability benefits you are receiving and the type of tax.
Social Security Disability Insurance (SSDI) is based on your work history and medical condition. Just because your impairment prohibits you from working, it does not mean your household is not allowed to earn income in other ways. For example, your spouse could work or you could collect income from investment dividends. If your income is over a specific amount, you could owe federal taxes even though Arkansas does not tax disability benefits. Recipients of Supplemental Security Income (SSI) likely do not earn enough income to pay either state or federal taxes as it is a needs-based program.
Successfully filing for Social Security Disability is challenging. The Social Security Administration does not make it easy. Fortunately, our experienced Fayetteville disability lawyers are here to assist you with the process and answer any questions you might have regarding SSDI, SSI, or your tax obligations. Call (479) 316-0438 today.
Does Arkansas Have Taxes on Social Security Disability Insurance?
Some states tax Social Security Disability benefits. Fortunately, if you are a resident of Arkansas, you are most likely exempt from paying state taxes on your SSDI. However, you still must report your disability income on your federal tax returns and could be taxed at the federal level.
For example, if you are married, file jointly with your spouse, and earn over $32,000 per year, a portion of your SSDI benefits is subject to federal tax. If you are single, the annual income must be more than $25,000. When calculating the income, only half of your disability benefits are included.
The percentage or portion of taxable benefits depends on your income and filing status.
Single
- $0 – $25,000 yearly: 0% of SSDI is taxable
- $25,000 – $34,000 yearly: 50% of SSDI is taxable
- Over $34,000 yearly: 85% of SSDI is taxable
Married
- $0 – $32,000 yearly: 0% of SSDI is taxable
- $32,000 – $44,000 yearly: 50% of SSDI is taxable
- Over $44,000 yearly: 85% of SSDI is taxable
The percentage relates to your benefits that are subject to tax. It does not reflect the tax rate. Your disability will be taxed at your marginal tax rate based on your total household income.
Can SSDI be Taxed in Arkansas if I File Jointly?
If you are married and file jointly in Arkansas, you could be required to pay federal tax on your disability payments even though you are exempt from paying state tax on SSDI. Married couples have the option of filing jointly or separately. However, any benefit that might be obtained by filing separately in relation to your disability benefits is probably lost because of the other advantages you lose filing jointly.
As the table above indicates, if your file jointly and your household income is above $32,000, half of your disability benefits could be taxed. If your yearly income is $44,000 or above, the percentage of disability benefits subject to tax increases to 85%. Before deciding how you and your spouse should file, contact our Arkansas Social Security Disability lawyers.
Do I Have to Pay Taxes on SSDI in Arkansas if I File Individually?
Whether you have to pay taxes on your SSDI benefits in Arkansas if you file individually depends on your income and the type of tax. In Arkansas, residents are not required to pay state income tax on disability benefits. However, you are still required to pay federal tax. The percentage of your benefits subject to tax is based on your income. If your taxable income is more than $25,000 a year, half of your benefits are taxable. Should your yearly income exceed $34,000, 85% of your benefits are subject to federal tax. To ensure you are receiving the benefits you deserve and that they are being taxed correctly, contact our Fort Smith disability lawyers.
Do I Qualify for SSDI Benefits in Arkansas?
Qualifying for SSDI benefits in Arkansas is challenging. In addition to proving you have a qualifying medical condition, you must have earned enough work credits throughout your employment lifetime. Determining whether you qualify for benefits is much too difficult a task to answer in a blog article.
Our experienced Bentonville disability attorneys will have to evaluate your claim thoroughly. Calculating your work credits is the easy part of the equation. After that, we will have to document your condition through your medical records, documentation, and reports prepared by your treating physicians. To be eligible for SSDI, your impairment must be expected to last at least twelve months or end in your death. Additionally, it must prohibit you from earning a living. The SSA does not make this process easy and any small mistake could result in your claim being denied before your medical evidence is reviewed.
Arkansas Disability Lawyers Working for You
People filing for disability have many questions. What conditions qualify? What type of evidence do I need? How do I qualify? How much will my benefits be? Are they taxable? Our Springdale disability lawyers understand that applying for disability is an overwhelming task. We are committed to assisting disabled individuals and their families obtain the financial help they need. Call (479) 316-0438 if you have any questions about the process or disability in general.