[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



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

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

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


lump-sum payments. "The IRS allows taxes on SSDI lump-sum payments to be

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

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

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

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

accident, health or pension plan and meet income requirements. For 2011,

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

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.



Allsup is a nationwide provider of Social Security disability, Medicare

Medicare Secondary Payer

compliance services for individuals, employers and insurance carriers.
Founded in

1984, Allsup employs more than 800 professionals who deliver specialized

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

Ill., near St. Louis. For more information, go to


or visit Allsup on Facebook at



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.


Mary Jung

(773) 429-0940


Rebeca Ray

(800) 854-1418 ext 65065


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