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How Does the “Marriage Penalty” Affect SSDI?

What Is a Marriage Penalty?

When filing your taxes, you must include your spouse’s income information. This is true whether you file jointly or separately. Including this extra money can result in your being put into a different tax bracket. Perhaps you make a small annual income as a teacher in a little private school. Your spouse, however, is a highly paid president at their company. Although your income puts you in a lower income bracket, your connection to your spouse puts you in a much higher bracket.

The result of this bracket move creates what some people call a “marriage penalty.” When someone in a lower income bracket combines their income with someone else, they may lose access to certain benefits, such as Medicare, Medicaid, or SSDI (Social Security Disability Insurance). This may not have a huge impact on the fictional couple mentioned above, but it could be a big problem for two people of modest means who suddenly find themselves unable to collect their benefits.

Even if people are still eligible to receive benefits, the marriage penalty may come in the form of higher taxes on their benefits.

SSDI income-to-tax ratio for married couples:

SSDI Qualifications

To be eligible for SSDI, you must have a history of working and contributing to Social Security. You must also be currently making little to no income, even if you are working. Workers who make more than $1,310 a month may not qualify for SSDI.

Next, your disability must be deemed “severe,” making you unable to work. It limits your functionality. For example, someone suffering from severe cystic fibrosis needs frequent care. They may find it difficult to even sit at a desk and work from home. Your disability must inhibit your ability to work for at least 12 months to be eligible for SSDI.

Common-Law Marriages

The marriage penalty could hit someone even if they are not technically married. Texas has a very traditional stance on its marriage laws. For example, if someone is discovered living with a boyfriend or girlfriend outside of their legal marriage, they could be accused of bigamy, or multiple marriage. Texas takes cohabitation with a romantic partner seriously. If a couple lives together and claims to be married, they are considered married by Texas’s common law.

Perhaps a cohabitating couple claims to be married only to avoid awkward conversations. Texas isn’t concerned with their motivations. Under common law standards, these people are considered married. There is no paperwork to file, and Texas doesn’t even have to notify you of your common law status. Once the state has deemed you a married couple, you will have to file your taxes appropriately, and you can lose your benefits.

Speak to an Attorney

If you are experiencing a marriage penalty, talk to a lawyer skilled in tax or business law. They may be able to find items you can deduct or ways to file that won’t affect your benefits. The system should be there to help and protect you, and a lawyer can fight to make sure you continue to get the benefits you need.

If you have questions or concerns about your SSDI benefits, contact us online or call us at 888-4-ZEN-LAW today. We are here to help Plano and Dallas residents with their options, and we can give you a free consultation.

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