It is tax time, and each year I hear from clients who won their cases the previous year and are wondering about the tax consequences of their disability benefits. This topic is particularly important for those who received a significant payment of past-due benefits.
The answer is part of your disability benefits may be taxable. Here is a link to IRS Publication 915 on the topic of taxation of Social Security benefits.
As you can see from the publication, it’s complicated. If you received a large lump sum payment of past due disability benefits last year, this is the time to get in touch with a tax accountant.