Welcome to the thirty-fourth edition of our newsletter.
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These monthly newsletters are designed to show you how not to gamble with your or your patients/clients Social Security Disability and/or SSI benefits. We also provide you with information on Special Needs Planning.
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|How Are Social Security Disability Benefits Taxed?|
Social Security Disability Insurance (SSDI) is a federal program that provides cash assistance to people with disabilities. Because SSDI is an insurance program and not a "means tested" benefit for people with minimal resources, anyone who meets the program's eligibility requirements can qualify for benefits, regardless of their income and assets. SSDI payments, like Social Security retirement benefits, can be taxed, depending on the SSDI beneficiary's other income.
To determine when the SSDI recipient should pay taxes on his or her benefits, the IRS adds one-half of a beneficiary's yearly SSDI award to his/her adjusted gross income (including tax-exempt interest payments). This figure is compared to a "base amount," and if it exceeds that base, then some of the beneficiary's SSDI award will be taxed. For single people, or married people filing separately who have lived apart for the entire year, the base amount is $25,000. Married couples filing jointly have a base amount of $32,000, and a married person who is filing separately but lived with his/her spouse for even a limited time has a base amount of $0 (this is not a misprint).
Here are some examples of how this works in practice. Let's say that Mary, a single woman, received $10,000 in SSDI benefits and $21,000 in taxable income from an annuity. Since one-half of Mary's SSDI benefit, plus her $21,000 in other income, is greater than her base amount of $25,000, a portion of Mary's SSDI benefit will be subject to federal income taxation. Now let's look at Joe and Barbara, a married couple living together and filing a joint tax return. Joe received a $10,000 SSDI benefit and Barbara earned $25,000 from work. When one-half of Joe's SSDI benefit is combined with Barbara's income, they are $2,000 below their base amount of $32,000, which means that none of Joe's SSDI benefit will be taxed.
If SSDI benefits are subject to tax, what portion of them is taxable? The short answer is either half of them or 85 percent of them, depending on income. If one-half of a single person's benefit plus the rest of her income is less than $34,000 (this threshold is $44,000 for a married couple filing jointly), then only 50 percent of her SSDI benefit will be taxed. If a beneficiary's income plus one-half of her benefit exceeds these thresholds, then 85 percent of the benefit is taxable.
Let's say that Mary still has her $10,000 SSDI benefit, but now she earned $30,000 from an annuity. One-half of her SSDI benefit plus the annuity income equals $35,000, so 85 percent of Mary's SSDI benefit will be taxed because she exceeded the $34,000 limit. On the other hand, in our example of Barbara and Joe above, let's now assume that Barbara earned $35,000 from work and Joe still received a $10,000 SSDI benefit. Joe's SSDI benefit is now subject to some taxation. But because one-half of Joe's benefit plus Barbara's income is less than $44,000, only 50 percent of Joe's benefit will be taxed.
There are many other tax tips for people with special needs that go far beyond SSDI benefit taxation, so make sure you discuss all of your options with your special needs planner, and your accountant before filing your tax return.
To read IRS publication 915 -- the handbook for calculating taxes on SSDI benefits -- click here.
|Bureau of Engraving and Printing Launches EyeNote™App to Help the Blind and Visually Impaired Denominate US Currency|
The Bureau of Engraving and Printing (BEP) has developed a free downloadable application (app) to assist the blind and visually impaired denominate US currency. The app is called EyeNote™. EyeNote™ is a mobile device app designed for Apple iPhone (3G, 3Gs, 4), and the 4th Generation iPod Touch and iPad2 platforms, and is available through the Apple iTunes App Store.
EyeNote™ uses image recognition technology to determine a note's denomination. The mobile device's camera requires 51 percent of a note's scanned image, front or back, to process. In a matter of seconds, EyeNote™ can provide an audible or vibrating response, and can denominate all Federal Reserve notes issued since 1996. Free downloads will be available whenever new US currency designs are introduced. Research indicates that more than 100,000 blind and visually impaired individuals currently own an Apple iPhone.
The EyeNoteTM app is one of a variety of measures the government is working to deploy to assist the visually impaired community to denominate currency, as proposed in a recent Federal Register notice. These measures include implementing a Currency Reader Program whereby a United States resident, who is blind or visually impaired, may obtain a coupon that can be applied toward the purchase of a device to denominate United States currency; continuing to add large high contrast numerals and different background colors to redesigned currency; and, raised tactile features may be added to redesigned currency, which would provide users with a means of identifying each denomination via touch.
More information is available at:
|Sheri Abrams' Book "Don't Gamble With Your Social Security Disability Benefits--What Every Virginia Resident Needs To Know To Win A Social Security Disability Case" Is Available.|
For more information please click here
to see our Press Release.
You can also download a free copy of the book at our websites:
|OUR OFFICE LOCATION|
The law firm of Needham Mitnick & Pollack, PLC, is located at:
400 S. Maple Avenue
Falls Church, VA 22046
This is in downtown Falls Church and the office has plenty of free and accessible parking.
If you know of someone who could use my legal services or any of the other members of the law firm of Needham Mitnick & Pollack, PLC, please forward to him/her this e-mail newsletter or give him/her our telephone number: (703) 536-7778.
We provide legal services in the areas of Social Security Disability Law , Elder Law, Wills and Trusts, Probate, Trust Administration, Powers of Attorney, Advance Medical Directives, Guardianships, Long Term Care Planning, Disability Planning, Medicaid Eligibility, Veterans Benefits and Special Needs Trusts.
If you, or someone you know, is involved with an educational event or support group that would benefit from a presentation on any of the areas of law for which we provide legal services, please call us at (703) 536-7778.