Can I Get a Tax Refund if My Only Income Is Social Security Disability?

Understanding whether you can receive a tax refund when your sole income is Social Security Disability benefits is crucial for financial planning. Many individuals rely on these benefits as their primary income source, so it’s important to understand how they interact with tax obligations and potential refunds.

Taxable vs Nontaxable Income

Social Security Disability Insurance (SSDI) benefits are generally not taxable unless your total income exceeds specific thresholds. For individuals, if your combined income—calculated as your adjusted gross income plus nontaxable interest plus half of your SSDI benefits—exceeds $25,000, a portion of your benefits may be taxable. For married couples filing jointly, this threshold is $32,000.

Other income sources, such as investments, pensions, or part-time work, can push your total income above these thresholds, potentially subjecting a portion of your SSDI benefits to federal income tax. The IRS provides worksheets in Publication 915 to help determine the taxable portion of Social Security benefits.

Determining Filing Obligations

Your obligation to file a tax return when your income is solely from Social Security Disability benefits depends on federal tax laws and your financial circumstances. For the 2024 tax year, single filers under 65 must file if their gross income is at least $13,850, while those 65 or older have a threshold of $15,700. For married couples filing jointly, the threshold is $27,700 if both spouses are under 65.

If your income is exclusively from SSDI and falls below these thresholds, you typically aren’t required to file a federal tax return. However, filing may still be advantageous if taxes were withheld from your SSDI benefits or if you qualify for refundable credits like the Earned Income Tax Credit (EITC), which could result in a refund.

Potential Refundable Credits

Refundable credits can provide refunds even if you owe no taxes. The Earned Income Tax Credit (EITC) benefits low-to-moderate income workers and families. While the EITC usually requires earned income, certain individuals with disabilities may qualify, such as those with a working spouse or those earning wages from a sheltered workshop. For 2024, the maximum EITC is $7,430 for families with three or more qualifying children.

The Child Tax Credit (CTC) offers up to $2,000 per qualifying child under 17, with up to $1,500 refundable as the Additional Child Tax Credit (ACTC) if the standard CTC exceeds your tax liability. This is helpful for families whose income consists primarily of non-taxable benefits.

Effect of Withholding

Withholding taxes from SSDI benefits impacts both immediate cash flow and longer-term tax outcomes. Beneficiaries can elect to have federal income taxes withheld from their SSDI benefits, which helps manage tax liabilities and avoid underpayment penalties or unexpected tax bills.

To adjust withholding, beneficiaries can file IRS Form W-4V, specifying a withholding percentage ranging from 7% to 22%. This option allows better control over tax obligations.

Filing Steps to Claim a Refund

Even if your income is below the taxable threshold, filing a tax return can help you claim refunds from withheld taxes or refundable credits. Start by gathering all necessary documentation, including Form SSA-1099, which details your total Social Security benefits for the year.

Use Form 1040 to file your return, completing sections related to refundable credits like the Earned Income Tax Credit or the Additional Child Tax Credit. If federal income tax was withheld from your SSDI benefits, report this amount on Line 25b of Form 1040. Filing electronically through IRS-approved software can expedite the process and reduce errors.

Refunds can be received via direct deposit, which is faster and more secure, or by mailed check. Free tax preparation services, such as the IRS Volunteer Income Tax Assistance (VITA) program, are available to help eligible taxpayers navigate the filing process.