Social Security Benefits versus Disability Social Security Benefits

[zeros]

For tax purposes are these handled differently?

[David1980]

For tax purposes are these handled differently?

No.

Though one area of confusion is SSI vs. SSDI. SSDI is social security disability insurance and gets treated just like social security income. Taxpayer receives SSA-1099, maximum 85% taxable etc... SSI is the supplemental security income program and isn't taxed - taxpayer won't receive an SSA-1099 for it, though it is administered through the social security administration (thus the source of confusion).

[DaveO]

Some states may treat them differently. In Nebraska SS disability does not count as income when filing a homestead exemption.

[mscash]

For tax purposes are these handled differently?

Regular SS benefits are calculated based on the age of the person when the start getting benefits. Disability benefits are calculated on the premise that the beneficiary is at full retirement age. When they get to that age they stop getting disability benefits and start getting regular benefits.

[susie58gemini]

Disability Social Secuirty

If disability social security is paid out before TP has reached retirement age, it is treated as Wages and reported as such on the 1040.

[kathyc2]

If disability social security is paid out before TP has reached retirement age, it is treated as Wages and reported as such on the 1040.

I do not believe this is true if from SS rather than disability insurance.

[dkss]

If disability social security is paid out before TP has reached retirement age, it is treated as Wages and reported as such on the 1040.

Disability SS benefits are reported on line 20 just like normal SS benefits. I believe that you are confusing SS disability with a disability pension form 1099-R with code 3 in box 7 received when under 59 and a half. The latter would be reported on line 7 not the former.

[David1980]

If disability social security is paid out before TP has reached retirement age, it is treated as Wages and reported as such on the 1040.

That's true for disability pensions on 1099-R. Different from disability social security.

[kathyc2]

For tax purposes are these handled differently?

This is not what you asked, but offering it just in case you weren't aware of this. Often when disability is approved payments applicable to multiple years are often paid out in one year. Client has the option of the lump sum election so the taxability of the benefits are calculated as if paid out in each year. The amounts for each year will be noted on the 1099.