Learn what you have to report to the Social Security Administration to avoid Social Security Disability overpayments and to get all benefits payable.
Know Your Responsibilities
Once you receive a Social Security Disability approval, your contact with the Social Security Administration is not over. It is important to report changes in your situation that could affect your getting your monthly benefit on time or your ability to avail yourself of Social Security’s several work incentive programs. Additionally, prompt report of changes in your health or work activity can help you avoid overpayments.
16 Events to Report
- Your medical condition improves enough that you could work if you wanted to and work was available.
- You take a job or become self-employed—no matter how little you earn. Let the SSA know how many hours you expect to work and how much you will be earning. Also, report if your employer, duties, or wages change. If you have not recovered, you may be eligible for the SSA’s work-incentive programs and continued SSDI benefits.
- You become eligible to receive worker’s compensation or disability retirement or regular retirement from a public employer. This should be reported whether you receive monthly benefits or a lump sum settlement as your Social Security Disability benefits will have to be recalculated.
- You are offered vocational services under the SSA’s Ticket to Work Program.
- Your benefits change or stop and you haven’t received a notification.
- You and/or your family members who are getting Social Security benefits plan to move. If the SSA is unable to contact you, your benefit payments will stop. Tell the SSA the effective date of your new address and new phone number. Of course, also inform your local post office of your change of address.
- Your benefit is being paid via direct deposit into your financial institution account and you change institutions. Report the name of the new institution and new account number to which you want your benefits sent. Allow 30-60 days for the SSA to revise their records. Keep your present bank account open until your SSDI benefit is received at your new financial institution.
- You get married or divorced. If you are receiving disability dependents or survivor’s benefits on a spouse’s or parent’s earnings record, your benefits may stop if you marry or divorce. If you are receiving benefits on your own earnings record, marriage may qualify your new spouse and your step-children for benefits after a year’s waiting period.
- You change your name by marriage or court order. If you do not notify the SSA right away, your benefits will continue to be issued under your old name and, if you have direct deposit, payments may not reach your account. If your SSDI benefits are being deposited onto an SSA-issued Direct Express® debit card, you might have problems using the card to make purchases or withdraw cash if the name on your identification is different from the name on your card.
- You’ve been receiving benefits because you were caring for a worker’s child younger than age sixteen or a disabled adult child and the child has left your care. Notify the SSA immediately and provide the name and address of the person with whom the child is now living. (A temporary separation may not affect your benefits if you continue to have parental control over the child, such as sending a child to stay with a relative for a short while, but your benefits will stop if you no longer have responsibility for the child.) Be sure to report your situation to the SSA so they can determine whether you continue to be eligible for benefits.
- You become the parent of a child including an adopted child after you qualify for benefits. The SSA will determine whether the child qualifies for dependents benefits.
- You were caring for a child who was receiving benefits and the child has been adopted by someone else. Notify the SSA of the child’s new name, the date of the adoption decree, and the adopting parent’s name and address. The adoption will not cause the child’s benefits to stop, and in rare circumstances the child might be eligible for a higher benefit under a combined family maximum.
- A family member who is receiving Social Security benefits dies. Also, make arrangements for someone to report to the SSA if you die while receiving benefits. Benefits are not payable for the month of death, so if a benefit payment is received for the month of death, it must be returned to the SSA. For example: If the person dies in July, the payment received in August, which is for July, must be returned. If direct deposit is used, notify the financial institution of the death, so it can return any payments that are not due. Note: Family members may be eligible for Social Security survivors’ benefits when a person getting disability benefits dies.
- You are convicted of a crime and are incarcerated for more than thirty continuous days after your confiscation, your benefits will stop. Similarly, benefits are not paid to persons confined in a mental institution or other facility in lieu of being jailed after a conviction or after being found innocent due to insanity or unfit to stand trial. While you’re confined, the SSA will not pay you disability benefits; however, any family members eligible for benefits based on your earnings record may continue to receive their benefits.
- You violate a condition of parole or probation imposed under federal or state law. Regular disability benefits or any underpayment due will not be paid for any month in which the violation occurs or continues.
- You leave the United States for thirty days or more and would like your benefit payments sent abroad. If you’re a U.S. citizen, you can travel to or live in most foreign countries without affecting your benefits; however, benefits cannot be sent to Cuba or North Korea. Withheld benefits can be paid to you once you leave these countries to live in another country. If you are not a U.S. citizen, more extensive restrictions apply.
Reporting Tips and Cautions
- Be prepared to give the date of any of the event you are reporting occurred.
- Have your SSDI claim number ready, it will be on the Award Notice you received when your claim was approved. If you receive benefits based on your own work, your claim number will be the same as your Social Security number followed by the letters “HA.” If you receive benefits based on someone else’s work, your claim number will be the worker’s Social Security number followed by “H” and a letter that shows your relationship to the worker.
- Take reporting seriously. If you become overpaid because you did not a report an event, you will have to repay the excess money. Also, if the SSA learns that you purposely gave them incomplete or false information or purposely failed to report a change that caused you to be overpaid, your benefits could be stopped and a financial penalty imposed. You could even be charged with fraud.
Are Social Security Disability benefits taxable?
Whether your Social Security benefits are taxed by the Internal Revenue Service of the Federal government depends on your total income for the year including wages, self-employment, interest, dividends and other taxable income.
Generally speaking, if you file an individual federal tax return and your total annual income excluding your Social Security is more than $25,000, a portion of your benefits will be taxable. If you and your spouse file a joint return and your income is over $32,000, a portion of your SSD benefits will be taxable. The portion of benefits taxable can range from 50% to 85% depending on your income. Additional rules apply to married couples who are filing separate returns. In each case the IRS provides a worksheet to figure how much is taxable. The IRS has special rules also for large lump-sum payments that are attributable in part to prior year eligibility.
When Your State Taxes Social Security Benefits
Many states do not have income tax at all. Among those that do have income tax, some do not tax Social Security benefits, regardless of a person’s total income. Other states follow the federal tax guidelines for the portion of the Social Security Disability benefits they will tax, and still others tax part of the benefits with exclusions more favorable than those given by the federal IRS. Like the IRS, your state’s revenue department and tax filing forms will provide guidance.
Contributions to Retirement Accounts and Self-Employment While Receiving Social Security Disability
Learn how retirement account contributions and self-employment relate to your claim for Social Security Disability benefits.
Dear Benefits Advisor,
I am a disabled veteran getting navy retirement, VA compensation and pending SSDI. I have been out of work for 1.7 years and although I cannot return to work in a traditional office or work full time I would like to do independent contract work from home. The work is very intermittent and only a few hours a week, but occasionally it may end up being above SGA. I would like to put my earning into an individual 401K so that I have a cushion in the future; it would also lower my taxes and I was wondering since I would not be claiming these earning would it also lower what I report to SSA so my SGA would be lower or maybe even nothing since I can contribute $24,000 of earnings? Thanks Kelly
Your contributions to a retirement plan will not lower your earnings when your work activity is evaluated for substantial gainful activity (SGA). Net profit and if you have been disabled for less than twenty-four months the number of hours worked per month, essential nature of services to the business, and other factors are considered in the evaluation of self-employment. In 2018, $1,180 net profit from self-employment is the dollar benchmark for SGA except for individuals who are blind or legally blind, whose benchmark is $1,970.
You need to report the work when you start. If you are approved, you will be asked for your gross earnings and net profit. Because compensation for self-employment services is not always received in the months in which the services are performed, receiving a substantial payment in one month may not mean that you earned it all in that month, so keep a work-activity log (dates and hours worked). If you are approved for Social Security Disability (SSD aka SSDI), discuss with a claims representative how to report your variable work activity and earnings other than submitting a copy of your self-employment tax return annually.
Do keep in mind that if some months are determined to be Trial Work Period (TWP) months, that is, months that you have net earnings of $850 or more, at the end of the nine TWP months, for the next thirty-six months, which is called the Extended Period of Eligibility, you will not be paid for any month you perform SGA. After the end of the EPE, if you perform SGA for even one month, your claim will be closed.