I am very upset because I understand that I will receive a 1099 form from S.S. for the whole amount of the back pay, in which the Attorney will be sent 25%, even before I see it. I AM EXPECTED to pay taxes on 85% of the "total" settlement just because my Husband works and makes over $44,000 per year.

That is so unfair because if it were VA Disability or SSI (based on income only), I would not have to pay taxes on it.

On top of that, then the Attorney has to pay taxes AGAIN!

We do not have enough deductions to qualify for Itemizing on our Income Tax, so we will not even be able to use the Attorney fee as a deduction. Talk about a racket!!!

REMOVED

Thanks

I understand being upset but it is the Federal Tax Law. It IS considered an income. Everyone who's income makes a said amount must pay taxes.

I highly suggest that if you do not get back money each year from your Federal Income Tax, especially if you do not own a home and pay a mortage, that you have taxes taken out of every check.

The 25% taken out of your check for your attorney is because they want to make sure your attorney actually gets the money they are owed. Additionally they want to be sure they do not charge you more than they are allowed to take. It would not be fair if you didn't pay them. In the past there has been a problem with this in that some people who were awarded their cases would not pay their lawyers and simply spend that money elsewhere.

I further suggest you save a percentage of the money that you recieved in backpay in a savings account so that when taxes are due next year you have enough money to pay the taxes owed.

The best thing to do at the end of the year is itemize your taxes and be sure to take whatever deductions that are you are legally allowed to take. Actually hire a tax preparer, that is deductable and probably the smartest move you can make.

The SS should have advised you that you must pay taxes. They also usually either send you a letter or give you the tax form when you first sign up for Disability.

Sorry you are upset ..Kissa is right..it is Federal Law...And every person that recieves SSDI if they fall into the income brackets they pay each year on their yearly SSDI payments....some on 50% and others higher...Even people on just SS pay Federal taxes if they fall into the income brackets...Now to avoid owing money each year at tax time I would suggest filling out the form to Social Security and have Federal Taxes taken out from each months checks...it's always easier to pay taxes alittle at a time then all at once.