Disability Benefits Can Get Reduced By Garnishment and Tax Cuts

Have you fought hard and long to get your social security disability insurance claim approved only to find out that taxes and garnishment will be deducted from your SSDI benefits? If so, you are not alone. Knowing that the government has approved cuts on your paycheck can be disappointing, but being informed as to where possible social security income deductions may come from can help manage your expectations and your monthly budget as well. 

Based on Farmer & Wright’s clientele, we share with you our answers to the most commonly asked questions about administrative offsets being applied to SSDI monthly payments. An administrative offset occurs when the federal government pays off your defaulted student loans, child support due, or tax balances using money it was supposed to give you, such as your social security benefit. 

Why take a portion of my SSDI benefit? 

Not all federal payments owed to you can be used by the government to pay back your debt. Sadly, the social security disability insurance is not anymore exempted from this. It used to be protected from any of these cuts by a clause on the Social Security Act which prohibited any person or entity from the government to collect any form of debt from the SSDI funds. 

Are administrative offsets legal?

Disability BenefitsIf you’re wondering about the legality of the move, then the answer is yes. The government will only deduct from your disability benefits through a legal process that will vary depending on the kind of debt. If it is for child support, then the process is called garnishment. This is an order which directs the third party to collect your assets to settle debts. Usually, this is taken from the debtors’ wages or money from a bank account. However, since SSDI beneficiaries may be unemployed or have low income due to their disability, the only “asset” to be seized is the benefit amount they receive. 

If, on the other hand, your disability payments decreased due to overpaid food stamps, then you would have received a written notice from the SSA, before it collects a portion of your claim through an administrative offset. If you want to know more details about the legal process and possible deductions on your SSDI benefits, get in touch with a social security disability attorney.

What can be deducted from my disability pay?

Under current laws, the government is allowed to use a portion of your cash benefits to repay any of your debts, including, but not limited to, the following: 

  • Delinquent taxes
  • Interim assistance reimbursement
  • Defaulted student loans
  • Overpayments from food stamps
  • Child support debt. 

The good news is, if you don’t owe any of these debts, you can expect to receive your disability checks in full.

How much can be offset for debts?

The answer to this question varies by state and type of debt. However, you may rest assured that your whole paycheck won’t be eaten up as there are limits to the amounts that the government can collect for each type of debt. If you have any outstanding loans and are expecting your social security disability benefits, you should consult with a social security disability lawyer to discuss your situation and know what to expect.

Why do I have a tax cut on my SSDI check when I have paid all previous taxes?

There are several disability programs handled by the Social Security Administration and social security taxes may be collected from you depending on which program you’re under.  Unfortunately, since the SSDI is income-based, the money that you receive in the form of a benefit is taxable. Moreover, the amount of the cut would depend on your income or if you have any gainful activity even with your impairment. On the positive side, you may not pay taxes if the Social Security Office deems that you are a recipient unable to work or engage in any substantial gainful activity due to a medical condition.

If, on the other hand, you were awarded disability payment under the Supplemental Security Income or SSI, then you won’t have any taxes due as this is considered a needs-based program, and SSI payments are designed to augment disabled citizens’ low income and cover for necessities. 

Have any concerns regarding your disability claim?

If some of your questions about social security that were not tackled above, such as regarding disability application, disability eligibility, disability claims, or appeals process, our firm can help you. We have compassionate social security disability lawyers at Farmer & Wright, PLLC that offer a free consultation or case evaluation for SSDI and SSI claimants. Call us at 270-443-4431 or contact us online today.

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