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Congratulations on winning your Social Security Disability Insurance Benefits! We know you’ve waited a long time, and thankfully it’s over. You have been awarded your benefits… so now what? You must have questions about what happens next, and we’ve written a series of Questions and Answers to help.
These are only general rules. In some cases, it takes as long as 3 months for back benefits to be paid. When it takes more than 90 days for back benefits to be paid in a Social Security disability case, it may mean that there has been a bureaucratic mix-up somewhere in the system, and you may need to take action to deal with the back pay.
If it’s been 90 days from the date of the decision and I am still not paid my back benefits, can anything be done to speed up payment?
It is possible that your attorney may be able to do something if you are not paid after 90 days. Be sure to call your attorney to explain that it has been three months and you haven’t been paid. It may be necessary to contact the payment center.
Another rule limits the payment of back pay to 12 months before the date of application. Therefore, your benefits will either begin 12 months before the date of application, or five full months after the date you were found to be disabled, whichever is later.
There are a couple of problems with direct deposit of back benefits. Often SSA has you sign up for direct deposit when you apply for benefits. If you forget you signed up, you may be looking for a check in the mail when the money has already been deposited to your bank account. Worse yet, if you close the bank account you told Social Security to use for direct deposits, it may take a while to straighten out. If this happens, go to the Social Security office to update your account information.
Disabled people with relatively low income and assets may be eligible for other programs that pay for medical expenses not covered by Medicare and/or pay the Medicare premium for you. To find out if you are eligible for any such programs, you need to check with your county welfare department.
If you already have health insurance coverage, you need to figure out how Medicare works with your health insurance. Many health insurance policies state that Medicare is to provide the primary coverage, and your present health insurance will pay what Medicare doesn’t cover. You need to check with your health insurance company when you get your Medicare card.
Single people with incomes over $34,000 and married people with incomes over $44,000 pay tax on a higher percentage of their Social Security disability benefits.
Here’s an odd thing: People whose Social Security benefits are reduced because of the worker’s compensation offset or offsets for other public disability benefits must count the amount of Social Security benefits not paid when determining taxability of their benefits. But if a child receives benefits on a parent’s account, those benefits count only for determining if the child must pay taxes on Social Security benefits received.
If you fall into the group of people who may be taxed on Social Security disability benefits only because you received a large check for past-due benefits during the year, you still may not have to pay tax on your Social Security benefits. The IRS has set up a way to recalculate your back benefits and consider them received in the year you should have gotten them rather than in the current year. Ask the IRS for a copy of Publication 915.
If your Social Security disability benefits end up being taxable, note that a portion of the attorney’s fee may be deductible. However, this depends on the “2% of adjusted gross income” ceiling on miscellaneous itemized deductions. If you have to repay a long term disability insurance carrier because of receipt of Social Security disability benefits, you may get special tax relief. Ask the IRS for Publication 525.
The Social Security Administration is supposed to send you a Form 1099 by February 1st of the year after your back benefits are paid. If you will have to pay taxes on your Social Security disability benefits, be sure to compare the information on the Form 1099 with the information on your Notice of Award. The Form 1099s from the Social Security Administration is often wrong. You will need to bring any errors to the attention of your tax preparer. For this reason, it is important to keep track of how much you actually receive from the Social Security Administration.
Tax law is very complex. Please talk to a tax specialist if you have any questions about taxes on your Social Security benefits.