Taxes Related To SSDI + IRA Withdrawals

[RetiredAt49]

My question is on behalf of my sister who is almost 62 years old and was just approved to begin receiving SSDI (Social Security Disability Insurance). According to TurboTax and other tax related website, they state that if 1/2 of the SSDI + other income (e.g. like traditional IRA withdrawals) exceeds $25,000 then 1/2 of your SSDI benefits are taxable.

Scenario: Let's assume that in 2025 my sister received $20,000 (in total) in SSDI payments and she pulled out $6,000 from her traditional IRA. Thus, if we understand things correctly she would NOT have to declared 1/2 of her SSDI benefits ($20,000 / 2 = $10,000) as income because her total income (1/2 of SSDI + IRA) is below $25,000, correct? Am I also correct in assuming that she wouldn't owe taxes on the $6,000 IRA withdrawals because in 2025 the standard deduction for a single person is $15,000?

 

[SecondCor521]

The first question is whether or not she would have a filing requirement. If she's 62, single, not blind, and the $20K of SSDI and $6K IRA distribution are her only income, then she generally would not be required to file a federal income tax return.

If she did choose to file a return, then she would report (not declare) her IRA distribution of $6K on line 4a and 4b. She would report (not declare) her SSDI of $20K on line 6a. She would complete the first several lines on the taxability of SS worksheet which would show her that she should put $0 on line 6b. She'd put the standard deduction of $15K on line 12, then do the math to realize she has a taxable income of $0 and a tax of $0.

So you're correct that she generally wouldn't owe taxes on the IRA distribution in her situation.

(When I write "generally", there are two main caveats: First, that you're representing accurately that those two things are all of her income. Second, there are some oddball situations where she'd still be required to file, but even in those cases she probably doesn't have any federal income tax due.)

 

[SevenUp]

According to TurboTax and other tax related website, they state that if 1/2 of the SSDI + other income (e.g. like traditional IRA withdrawals) exceeds $25,000 then 1/2 of your SSDI benefits are taxable.

That's not quite true. See Taxation of Social Security benefits - Bogleheads for details.

For example, with $20K SSDI and $16K other income, only $500 of the SSDI would be taxable.

 

[N02L84ER]

According to TurboTax and other tax related website, they state that if 1/2 of the SSDI + other income (e.g. like traditional IRA withdrawals) exceeds $25,000 then [UP TO] 1/2 of your SSDI benefits are taxable.

Up to 1/2 of your SS benefits become taxable after an individual's SS + other income exceeds $25K. After an individual's SS + other income exceeds $34K, up to 85% of the SS benefits become taxable.

Yes, if the individual's SS + other income is less than or equal to $25K, none of their SS benefits are taxable.