true Show Top Updated for Tax Year 2017 • February 1, 2022 03:02 PM OVERVIEW Wondering whether you can still file a tax return despite receiving some type of disability income? You may still have to file a return and pay taxes on this income. Watch this video to learn more about disability beneficiaries and how you should file your taxes. The article below is accurate for tax years prior to 2018. Some tax information below has changed for your 2018 and later tax returns. Learn more about tax reform here. Video transcript:Hello, I’m Jill from TurboTax, with important news for taxpayers who receive disability income. If you are wondering whether you can still file a tax return despite receiving some type of disability income, rest assured that the IRS will always accept your return—even if it reports zero taxable income. On the other hand, you shouldn’t assume that all forms of disability income are tax free and that you don’t have to report it on a return. But even if you find that your disability income is taxable—it doesn’t automatically mean that you have to file a tax return. The first thing you should determine when deciding whether to file a tax return is if your disability income is taxable. If you receive a disability pension from a private plan that your former employer pays for, all of your disability pension income is likely to be taxable.
Other forms of disability income that aren’t taxable include:
In the event some or all of your disability income is taxable, your next step is to assess whether filing a tax return is necessary.
If you do end up paying tax on your disability income and you are retired on permanent and total disability—you should determine if you are eligible to take the tax credit for the elderly and disabled to reduce whatever tax you might owe. A tax credit can be extremely valuable since it reduces the tax you owe on a dollar-for-dollar basis. Remember, when you use TurboTax to file your tax return, we’ll ask you simple questions and recommend the best filing status for you. Remember, with TurboTax, we'll ask you simple questions about your life and help you fill out all the right tax forms. With TurboTax you can be confident your taxes are done right, from simple to complex tax returns, no matter what your situation. All you need to know is yourselfAnswer simple questions about your life and TurboTax Free Edition will take care of the rest. For simple tax returns
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The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business. |