When Are Social Security Disability Benefits Taxable?

Posted on October 21, 2010 by Editorial Board

When a person is approved for Social Security disability benefits, they could be liable for taxes. They can find themselves with tax obligations if they have other sources of income over and above their disability payment.

If their spouse earns a larger income, that too can cause additional taxation.

It is important that people who collect disability benefits file with the IRS. This also is irrespective of whether the benefits are from Social Security or from disability insurance. Rules change somewhat if the benefit plans are public or private. A tax consultant should help you make these decisions to be sure you are in compliance with the law, just in case your understanding of the rules is not entirely correct.

Benefits can be taxed when:

・ A disabled worker who receives disability benefits continues to earn income from interest on savings accounts, pensions, dividend stocks. This includes, again, if joint income includes a substantial spousal income.

・ The rules with respect to disability benefits are identical to those of social security benefits. If a claimant is single, their income plus ½ of their disability money adds up to $25,000 and less than $34,000, then up to 50% of their benefits are taxable. If the amount surpasses $34,000, then taxes increase up to 85% on their benefits.

・ Married couples filing jointly. When combined income is added to benefits received, from between $32,000 and $44,000, then 50% of the benefits are taxable. Incomes higher than $44,000 will get taxed at the 85% rate on their benefits.

・ If the beneficiary is married but filing a separate tax return, they most likely will pay taxes on their benefits. This is because on the 1040 tax form, the filer’s combined income is the total sum of their adjusted gross income, any non taxable interest plus half of their Social Security benefits. In this case, the base amount for taxation purposes drops from $32,000 down to $0 on separate returns. The filer will also lose other tax benefits that are given to joint tax return filers.

For disability insurance benefit payments, the IRS will either tax the premium paid or benefits that were paid.  In most cases, the amount of taxes actually owed is far less. And recipients of disability benefits can also have the taxes automatically withheld as an easier alternative. The beneficiary can use Form W-4V to allow the IRS to withhold a percentage (not amount) of their benefits towards taxation.

For more information refer to the IRS’ Pub 915 which provides complete information on how to calculate whether or not Social Security disability payments are taxable or not, and get professional help if you have any doubts.

Posted in Basics of SSD, Questions & Answers, Winning Disability Benefits | Comments Off on When Are Social Security Disability Benefits Taxable?

Are Social Security Administrative Law Judges (ALJs) Fair?

Posted on October 19, 2010 by Editorial Board

Are ALJs Pressured Into Quotas or Other Non Claimant Friendly Goals?

Approximately 64 percent of applicants for disability benefits have their initial application denied. To pursue their claim, applicants who have been denied must present their case to an Administrative Law Judge (ALJ) at a disability hearing. As of October 2009, 722,822 people in the United States were awaiting disability hearings; some of these people will continue to wait for at least two years before they receive a hearing. With such a tremendous backlog of cases, it is often alleged that Social Security Administrative Law Judges are pressured into quotas or other non claimant friendly goals in order to hear all the cases awaiting decisions.

There is some evidence that this is the case. In just the two years between 2005 and 2007, ALJs saw an increase of 13% in the number of dispositions they were issued. The Social Security Administration’s most recent study on the disability claim process indicated that a reasonable caseload for ALJs should average 480 dispositions per year; ALJs are instead averaging over 500. An interesting result of this increased workload is that ALJs who do more than 600 dispositions in a year have a much higher rate of claim payment than those who see fewer cases. On the surface, this seems like an advantage for the claimant, who of course wishes to see his claim paid. Unfortunately, when claims get paid that shouldn’t be, it contributes to the overtaxing of the ALJs by adding cessation claims to their caseload.

Initiatives intended to speed up the process are often not beneficial to the claimant. Sometimes a claimant file is not prepared for the hearing and is instead presented to the claimant in an unorganized fashion, with duplicate pages and evidence not placed in any kind of order. While this may get the case to hearing more quickly, it makes it much more difficult for those involved to accurately evaluate the claim. Another shortcut, termed the “rocket docket,” works by calling a large number of unrepresented claimants to appear at once. Those who do appear are simply told that their hearing will be held soon; if a claimant fails to appear, his claim is dismissed without a hearing. This places an additional burden on the claimant by requiring at least one extra trip to the hearing office, and discriminates against those who did not hire an advocate to help you.

Although rules do not allow for the use of dispositional quotas, many ALJs feel as though the Social Security Administration is pressuring them to decide cases quickly, without adequate time to research the case. Fortunately, ALJs widely recognize this as a problem, and many are actively searching for better ways to address the extreme backlog of cases awaiting a disability hearing.

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What Causes a Stroke, and What Happens During a Stroke?

Posted on October 18, 2010 by Editorial Board

If you have suffered from a full-blown stroke, you may be eligible to receive Social Security disability benefits.  Stroke is mentioned in the medical conditions listings in the Social Security Administration’s impairment listing manual or “blue book.”  If someone who had a stroke meets the criteria of the listing, he or she should win Social Security disability benefits.

Strokes occur in over 700,000 Americans each year and they are the third leading cause of death in the United States. A stroke, or cerebrovascular accident (CVA), occurs if blood supply to a part of brain is interrupted due to any reason, causing brain cells to die.  The brain is a very sensitive organ and heavily dependent on continuous blood supply for its vitality and proper functioning. Any minor or even short interruption in blood supply can seriously affect brain cells, causing them to die within seconds.

Strokes are broadly categorized into the following two categories:

  1. Ischemic Stroke
  2. Hemorrhagic Stroke

Ischemic Stroke

Ischemia is defined as a restriction in blood supply, generally due to factors present within blood vessels, and can result in damage or dysfunction of cells and tissue. Interruption in blood supply towards brain can occur due to number of reasons including:

  1. i. Narrowing of blood vessels within the brain

Narrowing of blood vessels can occur due to a variety of reasons and such narrowing can lead to blockage of tiny blood vessels within brain. Depending on the size of the area these narrowed blood vessels supply, the brain cells start to die.

  1. ii. Atherosclerosis (hardening of blood vessels)

Atherosclerosis is a condition in which an artery wall thickens over time as a result of the build-up of fatty materials such as cholesterol. As arteries become narrow, the plaque or fatty debris can break off and can clog blood vessels supplying a part of the brain.

  1. iii. Due to Emboli (blood clots)

A blood clot or emboli formed within the heart can travel upward towards the brain and clog the arteries in the brain and cause a stroke.

Hemorrhagic Stroke

A hemorrhagic stroke occurs if an artery within the brain leaks or bursts and this leads to bleeding inside or near the surface of brain. The most common reason to have bleeding within the brain is uncontrolled hypertension or high blood pressure. Hemorrhagic strokes though are less common as compared to ischemic strokes but are more dangerous and deadly.

What happens during Stroke?

The symptoms generally depend on the part of brain being affected but common symptoms or warning signs that may be observed during an episode of stroke include the following;

  1. Sudden weakness or numbness of the face, arm or leg, generally on one side of the body,
  2. Confusion and trouble in speaking or understanding,
  3. Sudden eye sight problems in one or both eyes,
  4. Trouble in walking, lightheadedness, and loss of coordination or balance,
  5. Severe headaches without known causes may be experienced by a person having a stroke.
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Getting Past Drug Addiction and Alcoholism Issues by Simply Telling the Truth

Posted on October 12, 2010 by Editorial Board

Once you get to the point of appearing at a Social Security hearing, you may have waited months if not years from the date of your original application.  Most of your dealings with social security have been through paperwork and over the phone.  The hearing is your opportunity to tell an Administrative Law Judge (ALJ) face to face how your condition is impacting your life and ultimately your ability to work; therefore, it is important to make the best use of your time in your hearing.  A significant part of that is being completely honest with the ALJ, especially about drug addiction and alcoholism.

The most important quality you bring to the hearing is your credibility.  Your testimony can persuade the ALJ that you are in fact disabled.  If the ALJ believes your testimony, your case has an increased chance of being awarded; however, if the ALJ has a reason to doubt your truthfulness, your chances decrease.  It is more damaging to your case to lie about drug or alcohol use than to admit to it and maintain your credibility.

Each attorney makes a diligent effort to obtain up-to-date copies of your medical records.  These records not only show objective evidence such as MRIs or X-rays, but any observations your doctors have made as you are being examined.  This may include whether you can walk without assistance, how easily you can climb onto the examining table, and whether you appear to be intoxicated by drugs or alcohol.  The doctors may also perform a urinalysis or blood test to screen for illegal drugs or alcohol.  All of this is documented in the medical record and will be used as evidence during a hearing.  Some ALJs will ask the claimant about the observation made in the medical record or drug testing directly, while others will “test” the claimant to see if they will be truthful about their drug use.  It is best to be honest about drug use so that the issue can be addressed directly and the ALJ will be more likely to believe other aspects of your testimony.

The claimant has the burden of proof to show that the drug addiction or alcohol is not material to his or her disability.  Brown v. Apfel, 192 F.3d 492 (5th Cir. 1999); Doughty v. Apfel, 245 F.3d 1274 (11th Cir. 2001).  This means that you as the claimant, usually with the help of your attorney, have to show that the drug addition or alcoholism does not make a difference to the question of whether you are disabled.  In other words, if you removed the drugs or alcohol, would your impairment still be disabling?  To establish this point, it is best to have a drug or alcohol-free period.  The Hearings, Appeals and Litigation Law Manual (HALLEX) has referred to a period of one month to determine if the substance abuse is material to the disability.  The HALLEX is more of a guideline than legally binding, but any abstinence from substance abuse provides the opportunity to prove that substance abuse is not a material factor to your disability.  (HALLEX I-5-3-14A-V-D.)

Acknowledged medical evidence of drug addiction or alcohol, as described by the HALLEX, includes acceptable medical sources sufficient and appropriate to establish that the claimant has a medically determinable substance use disorder.  The ALJ can use your testimony as evidence, but merely admitting that you have abused or are addicted to a substance is insufficient alone to establish drug addiction or alcoholism even when otherwise reported by an acceptable medical source. (HALLEX I-5-3-14A-V-C.)

There may be some occasions where a claimant tests positive for a drug, but did not actually use the drug.  For example, a claimant may test positive for opiates when he in fact was using the prescribed drug codeine or morphine.  Codeine is a frequently prescribed narcotic used for the relief of moderate pain and cough suppression.  (www.usdoj.gov/dea/condern/codeine.html)

Another example may be inhaling second hand smoke from a person who is using marijuana nearby.  While this is possible, be aware that the levels of the drug in a person’s system are shown in a blood or urinalysis test, and professionals are aware of levels from smoking versus second hand smoke levels.  It is best to tell the ALJ the absolute truth about drug use even in these cases because the drug screens will accurately depict the quantity of drugs in your system.

Social Security hearings are informal, but you are still under oath.  Telling the truth about any illegal drug or alcoholism will allow your attorney to address the issue head-on and develop an argument, all to your benefit.

Posted in Legal Concepts in SSD, Social Security Hearings, Treatment & Compliance, Why People Are Denied | 2 Comments