How do you determine the tax on a lump sum social security disability check?

Answer by  GilFinn (2065)

Social Security Disability income is non-taxable. Therefore, you have no tax liabilty on the lump-sum paid once you have qualified for SSDI. You will see on the 1040 a place for non-taxable income, but that is not calculated in to the final tax liability. When unsure, it's always best to call the IRS directly using thier toll-free number.

Answer by  Chaneygirl (1755)

It depends on your other income and the amount of your payment. If 1/2 the SS plus your other income is over $25000 (single) or $32000 (married), it becomes taxable with your other income at that point. Consult IRS Pub 915 for possible election to lower taxes.

Answer by  PamelaK (264)

The tax is based on your annual income for the years included in your lump sum. There are worksheets and instructions in Publication 915. Request it from the IRS.