Whether you get a refund depends on what kind of disability income you receive
Some disability income is taxable and some is not. Social Security Disability Insurance (SSDI) may be taxable depending on your total income. Supplemental Security Income (SSI) is never taxable. Veterans disability payments are never taxable. Workers' compensation is never taxable. Private disability insurance payouts are usually not taxable, but the rules depend on who paid the premiums.
The key question is whether you owe federal income tax at all. If you do owe tax and had money withheld from paychecks or made estimated tax payments, you may get a refund. If you received only non-taxable disability income and had no other income, you probably do not owe tax and would not get a refund.
This matters because many people on disability do not realize they need to file a tax return at all — and if they do not file, they cannot claim a refund they are owed.
Key Takeaways
- SSDI is taxable only if your total income exceeds certain thresholds; SSI, Veterans disability, and workers' compensation are never taxable.
- You get a refund only if you owed federal income tax and had too much withheld or paid in — not because you received disability income.
- Many people on disability have no tax filing requirement at all, which means no refund is owed.
- If you did owe tax and paid it, you must file a return to claim your refund, even if no one withheld money from your disability payments.
When SSDI counts as taxable income
The IRS uses a formula called combined income to decide if your SSDI is taxable. Combined income is your adjusted gross income plus nontaxable interest plus half your SSDI benefits. If that number exceeds a threshold, some or all of your SSDI becomes taxable.
For 2024, the thresholds are $25,000 for single filers and $32,000 for married filing jointly. These thresholds have not changed since 1984. If your combined income is below the threshold, your SSDI is not taxable and you do not owe federal income tax on it.
If your combined income exceeds the threshold, the IRS taxes either 50% or 85% of your SSDI, depending on how far above the threshold you are. This is why someone on SSDI with other income (like part-time work, a pension, or interest from savings) may owe tax even though they thought disability income was not taxable.
What income counts toward your tax refund calculation
A tax refund happens when you have paid more tax than you actually owe. The amount you owe depends on all your income sources combined, not just disability.
If you have W-2 wages from work, those are always taxable and your employer withholds federal tax. If you have a pension, part of it may be taxable. If you have interest or dividends, those are taxable. If you have rental income or self-employment income, those are taxable. All of these add up to determine your total tax bill.
Then the IRS subtracts what you already paid through withholding or estimated tax payments. If you paid more than you owe, you get a refund. If you paid less, you owe more. This calculation is the same whether or not you receive disability income — disability just affects which part of your income is taxable in the first place.
Filing a return when you have no tax withholding
Many people on SSDI or SSI receive their payments directly without any federal tax withheld. If that is your only income and it is not taxable, you do not need to file a return and you will not get a refund.
But if you also have other income — even a small amount of wages or interest — you may owe tax. In that case, you must file a return to report all your income and pay what you owe. If you had too much withheld from the other income, filing the return is how you claim your refund.
You can file a federal tax return for free using IRS Free File if your income is below a certain level, or by mailing a paper return to the IRS. You do not need to have had money withheld to file and claim a refund.
How to report disability income on your tax return
If you receive SSDI, the Social Security Administration sends you a Form SSA-1099 each January showing how much you received in the previous year. You use this form to report your SSDI on your tax return.
If you receive SSI, you do not get a Form SSA-1099 because SSI is not taxable. You do not report it on your tax return at all.
If you receive Veterans disability, you do not report it on your tax return because it is not taxable. If you receive workers' compensation, you do not report it on your tax return because it is not taxable. If you have questions about whether a specific payment is taxable, the IRS Publication 907 covers disability income in detail.
Using the IRS worksheet to calculate taxable SSDI
The IRS provides a worksheet in Publication 915 that walks you through the combined income calculation step by step. You do not need to use it if you use tax software — most software calculates this automatically — but it can help you understand whether your SSDI is taxable before you file.
The worksheet asks you to list your adjusted gross income, add half your SSDI benefits, add any nontaxable interest, and compare the total to the threshold. If you are below the threshold, you are done. If you are above it, the worksheet shows you how much of your SSDI becomes taxable.
You can find Publication 915 on the IRS website or request a paper copy by calling 1-800-829-3676. Many local libraries also have copies, and some community organizations that work with people on disability have staff who can walk you through it.
Getting help with your tax return
If you are unsure whether you owe tax or whether you should file, the IRS Volunteer Income Tax information (VITA) program offers free tax return preparation. VITA sites are located in libraries, community centers, and nonprofit organizations across the country. You can find a site near you on the IRS website by entering your zip code.
VITA staff can tell you whether you have a filing requirement, help you gather the documents you need, and file your return for you. They are trained to handle disability income and understand the combined income rules for SSDI. There is no cost, and you do not need an appointment at most sites — though calling ahead is a good idea.
If you have a complex situation — such as self-employment income in addition to SSDI, or income from multiple states — a tax professional or CPA may be worth the cost to make sure you do not miss a refund you are owed.
Frequently Asked Questions
Can I get a refund if I only receive SSI?
No. SSI is not taxable income, so you have no tax filing requirement and no refund is owed. If you also have other income like wages or interest, you may owe tax on that income and could get a refund if too much was withheld — but the refund would be based on the other income, not the SSI.
What if I did not file a return in a previous year and I think I was owed a refund?
You can file a return for prior years. The IRS generally allows you to claim a refund for up to three years back. Contact VITA or a tax professional to file those returns and claim any refunds you are owed.
Do I have to report my disability income if I file a return for other reasons?
If you receive SSDI and file a return, you must report it using the Form SSA-1099 you received, even if the SSDI itself is not taxable. The IRS uses this information to calculate whether any of it becomes taxable based on your other income. If you receive SSI, Veterans disability, or workers' compensation, you do not report it.
What happens if I file and claim a refund I am not owed?
The IRS will catch the error when they process your return. They will either reduce your refund or send you a bill for the overpayment. This is why using VITA or tax software is helpful — they check your math and make sure you are claiming only what you are owed.
Can I have federal tax withheld from my SSDI payments?
Yes. You can request voluntary withholding on your SSDI by completing Form W-4V and sending it to your local Social Security office. This is useful if you know your SSDI will be taxable and you want to avoid owing a large amount at tax time.