Social Security Disability Benefits are Taxable Income

Social Security Disability benefits are generally treated as taxable income. You should advise your tax-preparer that you are collecting benefits, including any lump-sum retroactive payments you may receive.

One exception to this rule is if your disability benefit is secondary to a condition caused by terrorist activity (e.g. World Trade Center exposure). If your disability benefit was granted due to WTC-related conditions, you may be eligible to have your benefit excluded from your income. Please refer your tax professional to IRS Publication 3920 (available here: https://www.irs.gov/forms-pubs/about-publication-3920) which provides guidance as to what benefits are not considered taxable income.

Our firm cannot and does not provide tax advice, but many of our clients may benefit from this tax relief, and we believe it is important that you are aware of this potential benefit.