“In this world nothing is certain but death and taxes” - Benjamin Franklin

Introduction:

So, you receive Social Security and Disability Income and want to know if you need to or should file taxes. Well, that depends. The answer isn't an easy yes or no thanks to the bloated IRS tax system, but that is for another conversation. For instance, some people may not be required to file but they could be eligible for other tax credits and a return if they do file. Read more below:

With that said, here are 3 considerations to think about when it comes to the question of file or not file! 👊

1. SSI Benefits and Taxes

Social Security Income benefits are not taxable and are not considered earned income. Unless you have other substantial income in addition to your benefits like wages, self-employment income, earned interest or dividends. See the Benefits Planner | Income Taxes and Your Social Security Benefit | SSA.

Therefore for 60% of American who receive Social Security will not have to pay Federal Income taxes on their benefits. However, there are other reasons why you might want to consider filing your taxes, even when you don't have too. What? 🤯

For example, you may be eligible for other benefits such as the child tax credit, earned income tax credit, education tax credits, and others that could provide you with more money. To get these credits you must file a tax return. As with all things tax related it is always recommended to contact a local Certified Public Accountant.

2. Tax Credits for SSI Recipients

Some reason you may want to file a tax return is you may be eligible for other benefits such as the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), American Opportunity Tax Credit (AOTC), Lifetime Learning Credit (LLC), Saver's Credit, and others. To get these credits you must file a tax return and by doing so you may get a return without having to pay any taxes at all. Again, this is something the typical free filing software will not be able to provide proper guidance on so you will need to speak to a local Certified Public Accountant (CPA).

3. How to Find Your SSI Benefits

Knowing your Social Security Benefits will help you make better financial decisions, and you may need your benefits and award letter when applying for a mortgage or other loan type. Just know what is deposited into your bank account isn't enough as there may be deductions for health insurance or other items that an experienced mortgage broker can add back in, and they may be able to gross up your income by the amount of taxes you are not paying allowing you to better qualify. Go the mySocial Security to access or create an account.

While there's no one-size-fits-all answer, filing your taxes could be worth your time if you are eligible for other tax credits and potentially more money. For more information on taxes you can visit the IRS Frequently Asked Questions on Social Security Income online.

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