Social Security Disability Insurance (SSDI) benefits may be taxable; this depends on whether half of your benefits, as well as any additional income, exceeds $25,000 for an individual or $32,000 if you’re filing jointly with your spouse. However, this does not mean that these benefits are subject to an 85% tax rate. If your annual SSDI is $20,000 and 50% of it is taxable, this means that you only have to pay taxes on $10,000 of your total benefits. The final tax bill will be determined by the tax bracket you belong to.

Disability insurance policy payments may also be taxed. If your employer paid all premiums on the policy, all disability income you receive from the policy is taxable. If both you and your employer shared the premium fee, only the income attributable to your employer’s premium payments will be taxed. However, if you paid all premiums on the policy, all the income you receive from it will not be taxed.

Your state’s residence also plays a factor. Although most states do not tax SSDI, those that do usually exempt a particular percentage or dollar amount. States have their individual ways of treating disability income. For instance, California generally doesn’t tax disability income unless it’s considered to be a replacement for unemployment benefits.

If you’re faced with navigating the complexities of disability income and taxes, you might need professional guidance. To get in touch with a professional to advise you further on this topic, reach out to eddcaller.com. This site can help you connect with a live person at the EDD in California to provide you with expert insights or guidance on your disability income and its possible tax implications. Eddcaller.com is designed to simplify the process of getting in touch with the EDD, leading you to the right department and saving you from the ordeal of maneuvering through confusing call menus and extended hold times.