The answer is yes, they are partly taxable, depending on what your total income is, and whether you file separately or jointly. And, of course, there are a couple of technical and/or tricky points that may come into play. If you aren’t a tax whiz yourself, it’s time to call your Livonia disability lawyer.
Individuals with income over $25,000 up to $34,000 pay tax on about half of their benefits; if the income exceeds $34,000 they pay tax on 85% of their disability benefits. For couples, the corresponding limits are $32,000 through $44,000, and above $44,000.
The first tricky part is computing your income. The formula adopted by the IRS takes half of the adjusted gross income from your 1040, then adds in half of the disability benefits received during the year, plus the amount of any interest that was excluded from your adjusted gross income. Any benefits paid to your child on your account do not have to be taken into account in determining what your income is, but the child has to make a separate calculation to determine if the child has to pay taxes under the rules described above.
Ready to call your Livonia disability lawyer yet?
If the basic rules weren’t complicated enough, you should be aware of several other issues that also affect how much taxes you actually need to pay:
The law and the concepts are both complex. Talk to an experienced Livonia disability lawyer. Call J.B. Bieske and Jennifer Alfonsi, Attorneys at Law, at (800) 331-3530.