Getting benefits through social security can be a hassle. If you or a loved one are worried about needing disability benefits, you likely already know it can take some time for your application to be approved. Additionally, there are many other requirements that you must meet in order to get benefits. The unfortunate truth is that many people struggle when trying to get Social Security Disability Insurance (SSDI) benefits. Most applications are rejected at least once, if not more. However, beneficiaries are eligible for back pay of the missed funds they should have had when waiting for approval. These funds are considered back pay.
Who is Eligible for SSDI Back Pay?
A person approved for a disability lasting more than five months is eligible for reimbursement. There are no specific requirements other than that.
What is SSDI Back Pay?
An SSDI refund is a lump-sum payment for benefits you should have collected between the end of the five-month waiting period and the time you were approved. Even better, you can also receive benefits for the period between the start of your disability and when you file the claim.
In most cases, Social Security assumes that the date you applied for benefits is the date you became disabled. Therefore, you must confirm and prove that you were disabled before the date of the claim. In some cases, they may try to argue this. In these cases, it is best to consult a lawyer. For example, you could set your start date as the day you finish your job. The limit for retrospective benefits received for the period before your application is twelve months.
SSDI benefits are also paid on a back pay basis. This does not apply to SSI back pay if you receive both.
Is Disability Back Pay Taxable?
Yes, if your income is too high, you will need to pay taxes on the back pay. However, the IRS allows you to use “gross income elections,” which means you can adjust the following year’s income to reflect this. This process can be complicated, and you may need a computer or a good tax professional to get it right, but It is worth it to follow through with it.
If you receive both SSDI and SSI, your SSI will be reduced in ways that consider your SSDI income.
How Is Back Pay Paid?
SSDI reimbursement is typically paid in one lump sum; however, if you are also approved for SSI, you will receive the funds delivered in three equal installments, spaced six months apart. Additionally, you can apply for more money if you need extra funds for needs such as food or housing. If your life expectancy is less than twelve months, you will receive a lump sum payment instead of installments.
It can be hard to determine when you will receive a payment, especially since you typically receive a written approval notice. Often, a check has been known to arrive in someone’s bank account before they receive notification that their application has been approved. It may take longer, but you should receive it within sixty days of approval. As a note, if you hire an attorney, it will be deducted from your back pay.
Payment will be sent directly to your bank account. When you apply for disability, you also agree to a reasonable savings agreement to receive your benefits.
SSDI reimbursement is awarded to those with disabilities that take more than five months to determine. It covers the time between the end of the five-month waiting period and approval and any time between the start and submission of the application. Everyone approved for disability is eligible for back pay, which you must receive, excluding legal fees, within sixty days of approval.
