SSDI and the Child Tax Credit
The Child Tax Credit, or CTC, is a tax break available to many moderate- and low-income parents with taxable income. It is often available to households that receive SSDI as their sole or primary income and meet the minimum threshold to pay taxes on their SSDI benefits.
Understanding the Child Tax Credit and SSDI
The Child Tax Credit applies to families who fall below a certain taxable income threshold and have qualifying children. The credit allows families to reduce their tax liability up to $2,000 for each eligible child. To qualify, you must have less than $400,000 in income if you’re married filing jointly or less than $200,000 if you aren’t filing jointly.
The CTC is a nonrefundable tax credit, meaning it is not a tax refund paid to you. Rather, it reduces your tax burden. If you qualify, you save money by decreasing the taxes you must pay.
Families that earn more than $2,500 in income annually may also be eligible to receive a refundable benefit called the Additional Child Tax Credit, or ACTC. The Additional Child Tax Credit allows you to receive up to $1,700 of the $2,000 CTC per child as a refund for 2024 and 2025. It pays a refund of 15 percent of earned income over the $2,500 threshold for each child.
Am I Eligible for the Child Tax Credit if I Am on SSDI?
Whether you can claim the CTC as an SSDI recipient depends largely on whether your SSDI benefits are taxable. People whose SSDI benefits are untaxed are ineligible to claim the CTC because it is a credit applied to your tax liability. If you are already not paying taxes, there is no tax liability to apply the credit toward.
If you are taxed on your SSDI benefits, you may be eligible to claim the CTC. You must also meet the universal basic eligibility requirements for the CTC by having qualifying children and falling below a certain income threshold.
Income Considerations for SSDI Recipients
Parents who file for the CTC must earn less than $200,000 annually or $400,000 if filing a joint return. The vast majority of parents receiving SSDI fall below this threshold. Thus, they qualify for credit if at least part of their income is taxed.
Eligibility Requirements for Children
For you to claim the CTC for your child or children, they must meet eligibility requirements set by the IRS. To qualify, children must meet the following criteria:
- Be under the age of 17 at the end of the tax year
- Be a qualifying relative or foster child
- Not provide more than half of their financial support for the tax year
- Have lived with you for more than half the tax year
- Be claimed as a dependent on your return
- Not file a joint return for the year except in specific circumstances
- Be a U.S. citizen, permanent national, or resident alien
- Have a valid Social Security number issued before the due date of your tax return
If your child does not meet these requirements, you cannot claim the Child Tax Credit when you file taxes.
How Receiving Both the Child Tax Credit and SSDI Affects Your Taxes
The CTC reduces the amount of tax you owe, so you must have some taxable income to claim the credit. If all your income was nontaxable SSDI or SSI, you won’t have tax liability to apply the credit to and are therefore ineligible.
SSDI benefits are taxable when one-half of your benefits plus all other income exceeds the threshold base amount for your filing status. The following are the current base amounts:
- Single, head of household, or qualifying surviving spouse: $25,000
- Married filing separately and lived apart from your spouse for the entire year: $25,000
- Married filing jointly: $32,000
- Married filing separately and lived with your spouse at any time during the tax year: $0
If you meet the threshold to pay taxes on your SSDI benefits, your benefits will be taxed at either 50 or 85 percent, depending on your total income. Thus, you may claim the CTC on your tax return.
Other Government Assistance Programs
Many who receive SSDI benefits also get assistance from other government programs, including SNAP, TANF, WIC, Medicaid, and Medicare. Benefits from these programs do not count as earned income for taxation purposes, and you are not required to report them on your annual tax return. Therefore, receiving these benefits does not affect whether you can claim the CTC while receiving SSDI as your primary income.
The CTC also does not render you ineligible for any of these benefits. The CTC is a nonrefundable benefit and does not pay out any additional money. It only reduces your taxes.
The ACTC can impact your benefits if you receive a refund that puts you over the asset limit. However, you might be eligible to spend down this amount to get below the threshold. If you are worried about the potential ramifications, speak with an attorney about your options before claiming the ACTC.
Frequently Asked Questions About SSDI and the Child Tax Credit
Common questions we receive about the Child Tax Credit from parents receiving SSDI include:
Can I Qualify for the Child Tax Credit if My SSDI Benefits Are My Only Source of Income?
Yes, you can qualify for the CTC if your SSDI benefits are your only source of income. However, you must receive enough SSDI benefits to pay taxes. If your SSDI income falls below the taxable threshold, you cannot claim the CTC because you will not owe taxes to which to apply the credit.
Do I Need To File Taxes To Get the Child Tax Credit if I'm on SSDI?
Yes, you must file taxes to get the CTC if you are on SSDI. The CTC is a credit applied to your tax burden rather than a rebate or other payout.
Will Changes In My SSDI Payments Affect My Child Tax Credit Eligibility?
Changes in your SSDI payments may affect your CTC eligibility. If you previously did not pay taxes on your SSDI benefits but have since received a benefits increase that pushes your benefits past the taxable threshold, you are now eligible to claim the CTC.
If your benefits were reduced and fell below the taxable threshold, you cannot claim the CTC because you no longer have a tax burden to apply it to. However, you will likely still be able to claim the CTC for the last tax year during which you received taxable benefits. For example, suppose SSDI benefits decreased toward the end of the year. You could still claim the CTC on your 2024 tax return if the total benefits you received that year exceeded the taxation threshold.
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