[tabi] SSDI and income tax tips from Allsup
- From: "Chip Orange" <Corange@xxxxxxxxxxxxxxx>
- To: <tabi@xxxxxxxxxxxxx>
- Date: Mon, 12 Mar 2012 12:28:16 -0400
Mistakes with Reporting Social Security Disability Income Can Be Costly
at Tax Time,
Allsup Finds
PRWeb
Published 04:30 p.m., Friday, February 17, 2012
Press Release
(PRWEB) February 17, 2012
More than 1 million people with severe disabilities became beneficiaries
under the
Social Security Disability
Insurance (SSDI) program last year. But many of them are likely to
improperly report
their SSDI payments on their income tax returns, according to Allsup, a
nationwide
provider of Social Security Disability Insurance representation and
Medicare plan
selection services.
"It can take months and sometimes years to receive
Social Security disability
benefits. So, many people receive a one-time, lump-sum amount that
includes back
payments," said
Paul Gada
, a tax attorney and personal financial planning director for the
Allsup Disability Life Planning Center
. "One of the most frequent questions we receive from claimants at this
time of year
is whether SSDI benefits are taxable and how to report lump-sum payments
on their
tax return."
Up to 50 percent of
Social Security disability
benefits are taxable each year. The actual amount is determined by
adding one-half
of the taxpayer's SSDI benefits to all of his or her other income
sources. For 2011,
a federal income tax return must be filed if gross income is at least
$19,000 for
couples filing jointly and $9,550 for individuals.
"The average monthly SSDI benefit for 2011 was $1,072.96 or $12,875.54
for the year.
As a result, many people relying on SSDI will not owe taxes," Gada said.
"A problem
can occur, however, if they mistakenly report all of a lump-sum payment
received
in 2011 as 2011 income, in which case they could end up paying too much
in taxes."
According to Gada, it's essential that both individuals and their tax
preparers understand
how to report
SSDI
lump-sum payments. "The IRS allows taxes on SSDI lump-sum payments to be
spread
over previous tax years using the current-year tax return," Gada
explained. "This
means recipients do not have to go through the time or expense of filing
amended
returns, or pay higher taxes on their current year's income."
People who received a lump-sum SSDI payment in 2011 will see this amount
included
in Box 3 of the Form SSA-1099 they receive from the
Social Security Administration
(SSA). Worksheets provided in IRS Publication 915 and discussed in
Allsup's free
online guide,
Managing Your Taxes
, can be used to determine the taxable portion of a retroactive SSDI
payment. However,
Gada cautions it can be extremely difficult to do this by hand and
recommends seeking
help from a knowledgeable tax professional or, at the very least,
investing in tax
preparation software that covers this.
Other Money-Saving Tax Tips and Free Tax Filing Help
About 8.6 million disabled workers received income through the Social
Security Disability
Insurance program in 2011, including new beneficiaries.
Below, Allsup highlights additional tips that may help people with
disabilities and
their caregivers save on their taxes. More information is provided in
Allsup's
Managing Your Taxes
guide on Allsup.com, including links to
free tax filing assistance resources
.
Tax Credits
Earned Income Tax Credit (EITC). This is a refundable tax credit of
up to $5,751.
When it's applied, it could result in a refund. To be eligible, a
taxpayer or a spouse
needs to have been employed for part of 2011, earned below $13,660 to
$49,078 (depending
upon filing status and the number of children claimed) and had
investment income
of $3,500 or less. "Many people with disabilities don't file a tax
return because
their income is so low," Gada said. "But you could lose out on thousands
of dollars
from the EITC if you don't file a tax return."
Credit for people with disabilities. Taxpayers are eligible for this
credit of
up to $7,500, if they receive taxable disability income from a former
employer's
accident, health or pension plan and meet income requirements. For 2011,
adjusted
gross income (AGI) must be under $17,500 for single filers, under
$20,000 for joint
filers with one spouse eligible for the credit, or under $25,000 for
joint filers
with both spouses eligible.
Dependent care credit. Taxpayers who pay someone to care for a
dependent or spouse
with physical or mental impairments may be able to take a credit of up
to 35 percent
of day care costs while they are working or looking for work.
Tax Deductions
Increased standard tax deduction. People who are blind or visually
impaired may
be able to take a higher standard tax deduction.
Medical deductions. Taxpayers who itemize can deduct medical costs
if those costs
exceed 7.5 percent of their AGI. Deductible expenses include medical and
dental costs,
travel expenses for treatment, long-term care and medical insurance
premiums, and
costs for certain equipment for people with disabilities. Taxpayers with
a chronic
illness, or with a spouse or child with a chronic illness, may be able
to deduct
costs for attending conferences related to that illness.
Deduct the costs of seeking SSDI benefits. Taxpayers who hired a
representative
such as Allsup to help them get SSDI benefits and who itemize can deduct
the representation
fee paid from the taxable part of their benefits.
For more information on Social Security disability benefits, please
contact the
Allsup Disability Evaluation Center
at (800) 678-3276.
ABOUT ALLSUP
Allsup is a nationwide provider of Social Security disability, Medicare
and
Medicare Secondary Payer
compliance services for individuals, employers and insurance carriers.
Founded in
1984, Allsup employs more than 800 professionals who deliver specialized
services
supporting people with disabilities and seniors so they may lead lives
that are as
financially secure and as healthy as possible. The company is based in
Belleville,
Ill., near St. Louis. For more information, go to
http://www.Allsup.com
or visit Allsup on Facebook at
http://www.facebook.com/Allsupinc
.
The information provided is not intended as a substitute for legal or
other professional
services. Legal or other expert assistance should be sought before
making any decision
that may affect your situation.
Contact:
Mary Jung
(773) 429-0940
mtjung(at)msn(dot)com
Rebeca Ray
(800) 854-1418 ext 65065
r(dot)ray(at)allsupinc(dot)com
# # #
For the original version on PRWeb visit:
http://www.prweb.com/releases/prwebsocial_security/disability/prweb92060
61.htm
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