What Is Supplemental Security Income
Supplemental Security Income is a federal program that pays monthly benefits to low-income aged, blind and disabled individuals. The Social Security Administration runs the program, which is financed from general tax revenues, not from Social Security taxes. The SSI test of disability for adult applicants is the same as the test in the Social Security disability insurance program. Only people who have low incomes and limited financial assets are eligible for SSI. The federal SSI payment in 2017 for an individual with no other countable income is $735 a month. Payments are reduced as other income rises, and some states supplement the federal payment. Each month on average in 2016, 8.3 million low-income adults received SSI. These beneficiaries included 4.8 million adults under age 65 who were eligible based on disability or blindness and 2.2 million adults aged 65 and older. In addition, 1.3 million children under age 18 receive SSI based on disability or blindness.
The Irs Has Implemented A Fair System For Taxing Social Security Disability Back Payments That Come In A Lump Sum
By Aaron Hotfelder, J.D., University of Missouri School of Law
Because virtually every Social Security office in the country has a substantial backlog of disability cases, most people who are approved for Social Security disability or SSI benefits dont receive their first payment until many months, or even years, after filing their initial application. The good news is that if youre approved, Social Security will pay you back benefits for most or all of the months that youve waited. This amount is paid in a lump sum, and it can be substantial.
Many people wonder about the tax implications of receiving this lump sum. Is it taxable income? Can it bump me into a higher tax bracket? Can I apply the back payments to prior years income if Im receiving payments accrued over multiple years? Do I have to amend prior years returns to do this? Here are a few things to keep in mind when filing your taxes after receiving a lump sum back payment from Social Security.
How To Receive Federal Benefits
To begin receiving your federal benefits, like Social Security or veterans benefits, you must sign up for electronic payments with direct deposit.
If You Have a Bank or Credit Union Account:
- Call the Go Direct Helpline at .
If You Don’t have a Bank or Credit Union Account:
- Direct Express debit card – a pre-paid debit card. Get help by calling the Go Direct Helpline at .
Make Changes to an Existing Direct Deposit Account:
Learn how to make changes to an existing direct deposit account. You also may contact the federal agency that pays your benefit for help with your enrollment.
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What Determines The Disability Payment Wait Time For Most People
How long it takes for your first disability payment to arrive depends on a range of factors, such as:
- Determining when your disability actually started ,
- How soon you filed your claim paperwork after that, and
- Whether the SSA approves your claim after the initial filing date.
If the SSA doesnt approve your initial SSD claim, the appeal process also affects how long youll wait for benefits.
Delays happen for several reasons. One is because you, the claimant, may make some mistakes because youre unfamiliar with the system. You might not fill out the paperwork correctly, which can cause delays. You also might not submit medical records with your application, which may also cause delays. Or you may not know how and when to do things, which also extends your wait time.
Unless you are a disability lawyer or physician, you likely dont know which information is important to submit along with your claim. Its also not possible at this time to visit a Social Security Office and speak to a representative in person.
Your Ssdi Amount Can Be Reduced From Other Disability Payments
If you receive payments from a long term disability insurance policy, your SSDI payments will not be affected. However, payments from other government run disability programs such as state disability benefits or workers comp payments can reduce your SSDI payments.
If your earnings from government run disability programs like workers comp combined with your SSDI earnings exceed 80% of your average income before you became disabled, your SSDI payments will be reduced.
VA and SSI benefits do not reduce your SSDI benefits, however your SSDI benefits can reduce your SSI benefits.
Financial Eligibility for Social Security Disability
The financial eligibility requirements for SSDI and SSI differ. In order to receive SSDI, the prospective recipient must be able to demonstrate they have a disability that is medically determinable, that will continue to last no less than twelve months, and that prevents the individual from engaging in substantial gainful activity.
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Do I Have To File For Social Security Disability Income
Filing for Social Security Disability benefits is required when filing for Federal Disability Retirement benefits under FERS. This additional step, however, has always been somewhat confusing and problematic. Why does the Federal or Postal employee who is filing for Federal Disability Retirement benefits have to file for SSDI, anyway? What are the consequences of being denied ? What happens if the Federal or Postal employee who is filing for FERS Disability Retirement benefits becomes approved for SSDI?
How Long Does It Take To Get Disability Benefits On Your First Try
Technically, disability benefits should to start after a six-month waiting period that begins the day your condition starts. The Social Security Administration calls that day your onset date. So, for example, if your condition begins on January 1st and all goes well with your claim, your benefits could start July 1st.
The SSA says claims take three to five months to process, on average. The SSA doesnt make the initial decision, though. Instead, it sends your claim to a state agency for review. An agent at the state agency will request medical records and other evidence in order to make a determination. When that agency reaches a decision on your claim depends entirely on how long it takes those records or evidence to arrive.
That state agency might also send you additional paperwork to complete, or an independent physical examination. How long each of these steps takes to complete can also delay the decision process.
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Most People Who Are Approved For Social Security Disability Benefits Receive A Substantial Amount Of Backpay
By Lorraine Netter, Contributing Author
When you are awarded Social Security or SSI disability benefits, Social Security may owe you more than just your awarded monthly disability checks. How much disability income you are owed depends on different factors, including the type of disability benefits you are receiving and how long you were owed past benefits.
Working While You Receive Ssi Or Ssdi Benefits
If you want to try to go back to work while you are on SSDI or SSI, it is important to try to plan ahead. You will not automatically lose your disability benefits if you go back to work. SSA has special rules called work incentives. They allow you to keep all or part of your benefits while you try out your ability to work. SSAs rules concerning work, however, are complex and can be confusing. There are agencies in Illinois that can help you plan and determine how work earnings may affect your benefits. For agencies that can help you, see the directory of agencies on SSAs website. Note: Be sure to let SSA know if you start a job or leave a job. For SSI you must also report any changes in your monthly income, your assets, or your living situation. Changes can affect the amount of your benefit. Reporting right away will help you avoid any overpayment problems with SSA. Keep a record of any change that you report. Then you can show that you made a timely report even if SSA later claims it never received it.
Working and SSDI benefits
After the Trial Work Period ends, there is a 36 months where you cant get a SSDI monthly payment if you earn more than $1,310. This period is called the Extended Period of Eligibility. During these 36 continuous months, you can receive your full SSDI check for any month that:
- Your earnings fall below $1,310,
- You lose your job, or
- You become unable to continue to do your job.
Working and SSI
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How Much Money Can I Make A Month On Ssdi
If you start working after being approved for SSDI benefits, you may no longer be eligible if you earn more than $1,260 per month from your work. This is because the SSA would no longer consider you disabled since you are performing enough work to earn more than the SGA monthly limit, which is $1,260.
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Will I Receive A Notice From The Social Security Administration Explaining My Benefits
Yes. That notice is usually called a Notice of Award. This notice will show the date of entitlement and the amounts of benefits for all months of back benefits. It will show the total amount of benefits to be paid to you. It will show the amount of benefits withheld for direct payment of attorneys fees. It may also give you information about your Medicare eligibility and monthly Medicare premium. It may also give you some information about when to expect a continuing disability review.
Who Is Eligible For Di Benefits
The Social Security test of disability is very strict. To be eligible for disability benefits, the Social Security law says that the applicant must be unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or is expected to last for a continuous period of at least 12 months. Furthermore, the impairment or combination of impairments must be of such severity that the applicant is not only unable to do his or her previous work but cannot, considering his or her age, education, and work experience, engage in any other kind of substantial gainful work which exists in the national economy ).
A person is considered to be involved in substantial gainful activity if he or she earns more than a certain amount. If a non-blind individual earns more than $1,170 a month in 2017, he or she would not be eligible for disabled worker benefits. The amount is adjusted each year to keep up with average wages. The substantial gainful activity level for blind individuals in 2017 is $1,950 a month.
State agencies, operating under federal guidelines, make the medical and vocational determinations for the Social Security Administration about whether applicants meet the test of disability in the law. Medical records, work history, and the applicant’s age and education are considered in making the determination.
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What Happens If The Adult Child Gets Married
If he or she receives benefits as a disabled “adult child,” the benefits generally end if he or she gets married. However, some marriages are considered protected.
The rules vary depending on the situation. Contact a Social Security representative at 1-800-772-1213 to find out if the benefits can continue.
To speed up the application process, complete an Adult Disability Report and have it available at the time of your appointment.
How Are My Benefits Calculated
The SSA uses your Average Indexed Monthly Earnings and Primary Insurance Amount to calculate your benefits. The formula Social Security uses is quite complicated, and most people won’t be interested in trying to calculate their benefits on their own, especially because Social Security can give you an estimate.
To give you an idea of what you might receive, for 2021, the average SSDI benefit amount is $1,277 per month, but those whose income was fairly high in recent years can receive up to $3,148.
If you’re interested in how Social Security calculates your AIME and PIA, here’s how.
Average SSDI Benefit in 2021 Monthly Social Security disability benefits range from $100 to $3,148.
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An Example Of The Fers
Thus, by way of example: Hypothetical Annuitant A: A former Postal worker made $55,000.00 per year Thus, in the first year, he receives $33,000 as his FERS annuity , and in the second year, $22,000 as his FERS annuity . Rounding off the numbers to simplify, lets say that it comes to around $3,000 per month for the first year, then $2,000 per month for the subsequent years. The former Postal worker also gets SSDI approved, and the amount comes to $2,000 per month.
How does the offset work? Well, as SSDI is primary, the Postal worker would receive $2,000 from Social Security the first year, and $1,000 from his FERS annuity , and in the second and subsequent years, he would receive $2,000 from Social Security and $800.00 from FERS . If Annuitant A works at a private-sector job and makes $1,000 per month, all well and good for, that amount would not exceed the threshold for either the FERS Disability Retirement annuity nor the SSDI allowable amount. If, however, he goes out and makes $2,000 per month, or some higher amount that violates the allowable threshold for Social Security, then he will lose the SSDI benefit, and any prior offset with FERS will be recalculated to allow for the full annuity.
What Are The Most Common Disabilities For Di Recipients
Many beneficiaries have multiple conditions. Of the nearly 9 million individuals receiving disabled worker benefits at the end of 2014, 31 percent had mental impairments as the main disabling condition, or primary diagnosis. Musculoskeletal conditions such as arthritis, back injuries and other disorders of the skeleton and connective tissues were the main condition for 32 percent of the disabled workers. These conditions were more common among beneficiaries over the age of 50. About 8 percent had conditions of the circulatory system as their primary diagnosis. Another 9 percent had impairments of the nervous system and sense organs. The remaining 20 percent includes those with injuries, cancers, infectious diseases, metabolic and endocrine diseases, such as diabetes, diseases of the respiratory system, and diseases of other body systems. Moreover, many beneficiaries have life-threatening conditions: about 1 in 5 men and nearly 1 in 6 women who enter the program die within five years.
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Social Security Disability: Everything You Need To Know
Anyone can become temporarily or permanently disabled. In fact, many experts believe that Americans in their 20s today have about a 30% chance of experiencing a disabling condition severe enough to cause at least three months of missed work before they retire. Yet despite the significant risk of disability, most Americans have neither short-term nor long-term disability insurance.
If you sustain an illness or injury that leaves you unable to work, what can you do? One option is to apply for monthly disability benefits through the Social Security Administration, which also provides retirement benefits to seniors. However, qualifying for Social Security disability benefits can be complicated, and the bar for qualifying is set fairly high.
If you think you may come to rely on Social Security disability benefitsâ or if you simply want to find out how they work â this complete guide will provide the answers you need.
Adding On The State Supplement
While the federal benefit rate is the same throughout the United States, many states add a state supplemental payment onto the federal benefit. The payment varies from $10 to $400, depending on the state. Even within your own state, the supplementary payment can vary depending on whether you are married or single and what your living arrangement is. For instance, in 2021, California adds an extra $160 to the monthly SSI payment for most people living independently with cooking facilities and $247 to those living independently without cooking facilities.
Some states pay the supplement only to those living in nursing homes. For example, Texas pays a $60 supplement to those living in a nursing home, and pays nothing to others. Similarly, Georgia pays an extra $20 to those living in nursing homes, and nothing to others. Maine pays only $10 extra, both to those living independently and those living in nursing homes.
A few states don’t pay a supplement at all, including Arizona, Arkansas, Mississippi, North Dakota, Oregon, Tennessee, and West Virginia.
For more information, see our article on the state supplementary payment.
Will I Have To Pay Taxes On The Social Security Disability Benefits I Receive
Probably not, but this depends on the amount of your total income. Most people wont have to pay taxes on their Social Security disability benefits. Couples whose combined incomes exceed $32,000 and individuals with income exceeding $25,000 will pay income tax on a portion of their Social Security disability benefits. The IRS has an odd way of figuring out total income for this rule. The IRS uses adjusted gross income as reported on Form 1040, plus one-half of the total Social Security benefits received for the year, plus non-taxable interest.
Single people with incomes over $34,000 and married people with incomes over $44,000 pay tax on a higher percentage of their Social Security disability benefits.
Heres an odd thing: People whose Social Security benefits are reduced because of the workers compensation offset or offsets for other public disability benefits must count the amount of Social Security benefits not paid when determining taxability of their benefits. But if a child receives benefits on a parents account, those benefits count only for determining if the child must pay taxes on Social Security benefits received.
Tax law is very complex. Please talk to a tax specialist if you have any questions about taxes on your Social Security benefits.