In some cases: Yes. This includes Social Security Disability and Social Security retirement payments.
You will soon receive a Form SSA-1099 from the Social Security Administration showing the amount of the benefits (disability or retirement) that you received in 2009. To determine if any of your benefits are taxable, figure 50% of your Social Security benefits, and add all of your other income for the year.
Compare that amount with the base amount for your filing status. For single people, the base amount is $25,000. If one-half of your benefits and all your other income is less than $25,000 none of your benefits are taxable.
There are deductions available for attorney's fees in cases where someone had to hire an attorney in order to get their benefits. Be sure to consult with your tax professional, because everyone's situation is different.
Cannon & Anderson, Attorneys
Straight Answers about Social Security Disability
2916 Tazewell Pike, Ste. F
Knoxville, TN 37918