Security Disability Insurance (SSDI) benefits are not taxable in North Carolina. However, you may owe federal taxes on SSDI payments. Continue reading to learn more about Social Security Disability benefits, how you can secure monthly payments, and how they may affect your taxes.
North Carolina Does Not Tax Social Security Income
SSDI is not taxable in North Carolina. The state also does not collect taxes on any other form of Social Security, including retirement benefits or Supplemental Security Income (SSI). According to the American Association of Retired Persons (AARP), only twelve states tax part or all of their residents’ Social Security payments. These states include:
- New Mexico
- Rhode Island
- West Virginia
Will You Pay Federal Taxes on Social Security?
Social Security encompasses two benefits programs for individuals with disabling injuries or illnesses:
- SSDI. This program benefits workers who have earned work credits through their taxable employment income. You can earn up to four credits per year and usually need at least 20 credits to qualify for payments. Older workers may require more credits, and younger workers may need fewer.
- SSI. You do not need work credits to qualify for SSI. Benefits through this program are available to disabled individuals with limited resources and income.
The Internal Revenue Service (IRS) reports that SSI is not taxable. However, you may owe federal taxes on SSDI. You may pay up to 85 percent of your SSDI and Social Security retirement benefits if one-half of your benefits, plus all of your additional income (including tax-exempt interest), exceeds the base amount for your filing status, which is as follows:
- $25,000 if you file as single, head of household, or qualifying surviving spouse
- $25,000 if you are married, filing separately, and have lived apart from your spouse for the entire year
- $32,000 if you’re married and filing jointly,
- $0 if you’re married, filing separately, and lived with your spouse at any time during the tax year
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Is SSDI Backpay Taxable?
You can seek back pay for the months between when you applied for SSDI benefits and the date the Social Security Administration (SSA) approved your claim. If you receive back pay as a lump sum, this could put your income into a bracket that would make your Social Security Disability benefits taxable.
It is possible to amend your tax returns so that you do not have to claim all of your back pay in the same year. This process, as well as calculating and seeking back payment, can be complex. If you need assistance, a lawyer with our firm can explain your options.
How Much Is a Social Security Disability Benefits Payment?
According to the SSA, the federal SSI benefit rate for 2023 is $914 per individual or $1,371 per couple. North Carolina administers a state SSI supplement. You must apply for federal and state benefits separately.
How much SSDI you receive will depend on your earned work credits. In general, the more credits you have, the higher your monthly payments will be. You can get an estimate using the SSA’s Benefits Calculator.
Who Qualifies for Social Security Disability?
You must have a qualifying health condition to receive Social Security Disability. The SSA lists injuries and illnesses (and criteria for evaluating them) in the Blue Book. Listed conditions include but are not limited to:
- Chronic heart disease
- Chronic respiratory disorders
- Chronic kidney or liver disease
- Parkinson’s Disease
- Early-onset Alzheimer’s
- Severe back problems
- Severe burns
- Organ transplant
- Multiple sclerosis (MS)
- Speech, vision, and hearing impairments
- Immune system disorders
- Amyotrophic lateral sclerosis (ALS)
The SSA considers conditions listed in the Blue Book to be severe enough that they are likely to interfere with your ability to work. If you have a serious medical problem that is not listed, that does not mean you cannot receive SSI or SSDI. You can still apply for benefits, but you may need to supply additional medical evidence to support your claim.
The SSA will also review your medical condition to determine if you are able to perform substantial gainful activity (SGA). The SGA limit for 2023 is an average of $1,470 per month. If you can earn this amount or more at your current job or by doing some other type of work, you do not qualify as disabled.
Do You Need Help Securing Social Security Disability?
Applying for Social Security Disability can be complicated, and well over half of all initial applications get denied, according to the Social Security Office of Retirement and Disability Policy. It may benefit you to work with a North Carolina Social Security Disability attorney with our firm.
We can ensure you correctly complete and file your application so that you can avoid common pitfalls that may lead to a denial. We can also assist you with collecting and submitting the needed personal, medical, and financial information.
We Assist With Appeals
If you have already received an unfavorable determination, we can help you navigate an appeal. But do not delay. You have only 60 days from receiving notice of denial to begin the appeals process. You then have 60 days between each stage (reconsideration, Administrative Law Judge (ALJ) Hearing, Appeals Council, or Federal Court) to progress your claim.
We can file your appeal related-paperwork, obtain and submit additional evidence to support your claim and represent you during an ALJ Hearing. If necessary, we will advocate for you in court. Throughout the way, we will provide you with frequent and timely updates regarding your case.
Contact Farmer & Morris Law, PLLC, for Help With Your Social Security Disability Claims
SSDI is not taxable in North Carolina, but you may owe federal taxes. If you have an issue with the taxes on your back pay or benefits or need assistance submitting or appealing a disability claim, an attorney with our firm can help. We are here to answer your questions and tell you more about your Social Security Disability case.
Contact us today to learn more with a risk-free, no-cost consultation. Connect with a lawyer near you.