Social Security Benefits Taxed Like Retirement Benefits

Social Security benefits paid to retirees may be fully tax free or included in gross income at 50% or 85%, depending on the amount of benefits, tax-free interest, and overall income. But what about Social Security benefits paid on account of disability?

In a recent federal appellate court decision, a taxpayer failed to include $21,889 of Social Security benefits in the income on his 2008 federal income tax return. The court said that there’s no difference in the tax treatment of retirement benefits and disability benefits. While the amount paid may be different, the tax treatment is the same.

Source: Barefield, CA-11