How Over Under Works

How You Qualify

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• How tax brackets work. Say you’re single with no dependents, and your taxable income is $9,000. Your marginal tax rate, according to the Federal Income Brackets chart below, is 10 percent. You pay $900 in income tax. What if your taxable income is $19,000? As a Single filer, you’re now in the 12 percent tax bracket.

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To qualify for Social Security disability benefits, you must first have worked in jobs covered by Social Security. Then you must have a medical condition that meets Social Security's definition of disability. In general, we pay monthly benefits to people who are unable to work for a year or more because of a disability.

Benefits usually continue until you are able to work again on a regular basis. There are also a number of special rules, called 'work incentives,' that provide continued benefits and health care coverage to help you make the transition back to work.

If you are receiving Social Security disability benefits when you reach full retirement age, your disability benefits automatically convert to retirement benefits, but the amount remains the same.

How Much Work Do You Need?

In addition to meeting our definition of disability, you must have worked long enough — and recently enough — under Social Security to qualify for disability benefits.

Social Security work credits are based on your total yearly wages or self-employment income. You can earn up to four credits each year.

The amount needed for a work credit changes from year to year. In 2021, for example, you earn one credit for each $1,470 in wages or self-employment income. When you've earned $5,880, you've earned your four credits for the year.

The number of work credits you need to qualify for disability benefits depends on your age when you become disabled. Generally, you need 40 credits, 20 of which were earned in the last 10 years ending with the year you become disabled. However, younger workers may qualify with fewer credits.

For more information on whether you qualify, refer to How You Earn Credits.

What We Mean By Disability

The definition of disability under Social Security is different than other programs. Social Security pays only for total disability. No benefits are payable for partial disability or for short-term disability.

We consider you disabled under Social Security rules if all of the following are true:

• You cannot do work that you did before because of your medical condition.
• You cannot adjust to other work because of your medical condition.
• Your disability has lasted or is expected to last for at least one year or to result in death.

This is a strict definition of disability. Social Security program rules assume that working families have access to other resources to provide support during periods of short-term disabilities, including workers' compensation, insurance, savings, and investments.

How We Decide If You Are Disabled

If you have enough work to qualify for disability benefits, we use a step-by-step process involving five questions to determine if you are disabled. The five questions are:

1. Are you working?

If you are working in 2021 and your earnings average more than $1,310 a month, you generally cannot be considered disabled.

If you are not working, we will send your application to the Disability Determination Services (DDS) office that will make the decision about your medical condition. The DDS uses Steps 2-5 below to make the decision.

2. Is your condition 'severe'?

Your condition must significantly limit your ability to do basic work-related activities, such as lifting, standing, walking, sitting, or remembering – for at least 12 months. If it does not, we will find that you are not disabled.

If your condition does interfere with basic work-related activities, we go to Step 3.

3. Is your condition found in the list of disabling conditions?

For each of the major body systems, we maintain a list of medical conditions that we consider severe enough that it prevents a person from doing substantial gainful activity. If your condition is not on the list, we have to decide if it is as severe as a medical condition that is on the list. If it is, we will find that you are disabled. If it is not, we then go to Step 4.

We have two initiatives designed to expedite our processing of new disability claims:

• Compassionate Allowances: Certain cases that usually qualify for disability can be allowed as soon as the diagnosis is confirmed. Examples include acute leukemia, Lou Gehrig’s disease (ALS), and pancreatic cancer.
• Quick Disability Determinations: We use sophisticated computer screening to identify cases with a high probability of allowance.

For more information about our disability claims process, visit our Benefits For People With Disabilities website.

4. Can you do the work you did previously?

At this step, we decide if your medical impairment(s) prevents you from performing any of your past work. If it doesn’t, we’ll decide you don’t have a qualifying disability. If it does, we proceed to Step 5.

5. Can you do any other type of work?

If you can’t do the work you did in the past, we look to see if there is other work you could do despite your medical impairment(s).

We consider your medical conditions, age, education, past work experience, and any transferable skills you may have. If you can’t do other work, we’ll decide you are disabled. If you can do other work, we’ll decide that you don’t have a qualifying disability and your claim will be denied.

Special Situations

Most people who receive disability benefits are workers who qualify on their own records and meet the work and disability requirements we have just described. However, there are some situations you may not know about:

Special Rules For People Who Are Blind Or Have Low Vision

We consider you to be legally blind under Social Security rules if your vision cannot be corrected to better than 20/200 in your better eye or if your visual field is 20 degrees or less, even with a corrective lens. Many people who meet the legal definition of blindness still have some sight and may be able to read large print and get around without a cane or a guide dog.

If you do not meet the legal definition of blindness, you may still qualify for disability benefits if your vision problems alone or combined with other health problems prevent you from working.

There are a number of special rules for people who are blind that recognize the severe impact of blindness on a person's ability to work. For example, the monthly earnings limit for people who are blind is generally higher than the limit that applies to non-blind disabled workers.

In 2021, the monthly earnings limit is $2,190.

Benefits For Disabled Widows Or Widowers

If something happens to a worker, benefits may be payable to their widow, widower, or surviving divorced spouse with a disability if the following conditions are met:

• The widow, widower, or surviving divorced spouse is between ages 50 and 60.
• The widow, widower, or surviving divorced spouse has a medical condition that meets the definition of disability for adults and the disability started before or within seven years of the worker's death.

Widows, widowers, and surviving divorced spouses cannot apply online for survivors benefits. However, if they want to apply for these benefits, they should contact Social Security immediately at 1-800-772-1213 (TTY 1-800-325-0778) to request an appointment

How Does Under Over Work

To speed up the application process, complete an Adult Disability Report and have it available at the time of your appointment.

We use the same definition of disability for widows and widowers as we do for workers.

Benefits For A Disabled Child

A child under age 18 may be disabled, but we don't need to consider the child's disability when deciding if he or she qualifies for benefits as a dependent. The child's benefits normally stop at age 18 unless he or she is a full-time student in an elementary or high school (benefits can continue until age 19) or is disabled.

Children who were receiving benefits as a minor child on a parent’s Social Security record may be eligible to continue receiving benefits on that parent’s record upon reaching age 18 if they are disabled.

Adults Disabled Before Age 22

An adult who has a disability that began before age 22 may be eligible for benefits if a parent is deceased or starts receiving retirement or disability benefits. We consider this a 'child's' benefit because it is paid on a parent's Social Security earnings record.

The disabled 'adult child' — including an adopted child, or, in some cases, a stepchild, grandchild, or step grandchild — must be unmarried, age 18 or older, have a disability that started before age 22, and meet the definition of disability for adults.

It is not necessary that the disabled 'adult child' ever worked. Benefits are paid based on the parent's earnings record.

• A disabled 'adult child' must not have substantial earnings. The amount of earnings we consider 'substantial' increases each year. In 2021, this means working and earning more than $1,310 a month.

What if the adult child is already receiving SSI benefits or disability benefits on his or her own record?

A disabled 'adult child' already receiving SSI benefits or disability benefits on his or her own record should check to see if benefits may be payable on a parent's earnings record. Higher benefits might be payable and entitlement to Medicare may be possible.

How do we decide if an adult 'child' is disabled for SSDI benefits?

If a child is age 18 or older, we will evaluate his or her disability the same way we would evaluate the disability for any adult. We send the application to the Disability Determination Services (DDS) in your state that completes the disability decision for us.

What happens if the adult child gets married?

If he or she receives benefits as a disabled 'adult child,' the benefits generally end if he or she gets married. However, some marriages (for example, to another disabled 'adult child') are considered protected.

The rules vary depending on the situation. Contact a Social Security representative at 1-800-772-1213 (If you are deaf or hard of hearing, call TTY number at 1-800-325-0778) to find out if the benefits can continue.

How Over Under Trigger System Works

To speed up the application process, complete an Adult Disability Report and have it available at the time of your appointment.

Related Information

Publications

• SSI Child Disability Starter Kit (for children under age 18)

Updated tax brackets for the year 2020

Your bracket shows you the tax rate that you will pay for each portion of your income. For example, if you are a single person, the lowest possible tax rate of 10 percent is applied to the first $9,525 of your income in 2020. The next portion of your income is taxed at the next tax bracket of 12 percent. That continues for each tax bracket up to the top of your taxable income.

The progressive tax system ensures that all taxpayers pay the same rates on the same levels of taxable income. The overall effect is that people with higher incomes pay higher taxes.

What bracket are you in, and what does that really mean?

How The Over Under Works

Your tax bracket, roughly speaking, is the tax rate you pay on your highest dollar of taxable income. It is not the tax rate you pay on all of your income after adjustments, deductions, and exemptions. Your bracket only determines your individual income tax rates for each additional dollar of income (ignoring the effects of rounding.)

We have federal tax brackets in the U.S. because we have a progressive income tax system. That means the higher your income level, the higher a tax rate you pay. Your tax bracket (and tax burden) becomes progressively higher.

In a progressive tax system, rates are based on the concept that high-income taxpayers can afford to pay a high tax rate.

Low-income taxpayers pay not just lower taxes overall, but a lower percentage of their income within this tax system.

How tax brackets work

Say you’re single with no dependents, and your taxable income is $9,000. Your marginal tax rate, according to the Federal Income Brackets chart below, is 10 percent. You pay $900 in income tax. That’s simple.

What if your taxable income is $19,000?

As a Single filer, you’re now in the 12 percent tax bracket. That doesn’t mean you pay 12 percent on all your income, however.

You pay 10 percent on the first $9,525, plus 12 percent of the amount over $9,525.

Here’s the math:

What if your taxable income is $115,000?

As a Single filer, you moved up to the 24 percent bracket, so things get a bit more complicated. In this case:

You pay 10 percent on the first $9,525

plus 12 percent of the amount between $9,526 and $38,700

plus 22 percent of the amount between $38,701 and $82,500

plus 24 percent of the amount over $82,501.

Here’s the math:

Find your bracket in the following chart based on your filing status and 2020 income:

Federal Income Tax Brackets

2020 Tax Brackets

2017 Tax Brackets

Find out which IRS tax bracket you are in. Estimate your tax rate with our tax bracket calculator. If you’re wondering how much you’ll save after the tax reform bill, check out our Tax Cut & Jobs Act calculator.

Busting a tax bracket myth

Some people think if they earn more money, they are in a higher tax bracket. They believe they pay more taxes and may actually have less money left over than they would if they had earned less.

Using the example above, you can see that’s not true.

Each dollar you earn only affects the tax rate and taxes owed on additional income. It does not change the rate applied to dollars in lower brackets.

Unless you are in the lowest bracket, you actually have two or more brackets. If you are in the 24 percent tax bracket, for example, you pay tax at four different rates – 10 percent, 12 percent, 22 percent, and 24 percent.

Based on the tax brackets, you always have more money after taxes when you earn more. But, of course, rates are not the only factor in your final tax bill. You can lose tax benefits that phase out at higher income levels, such as education for higher education. In some tax scenarios, it might make sense to avoid higher tax brackets if possible.

It pays to use TaxAct as a planning tool to see how different levels of income affect your tax benefits and final tax bill.

Use the tax code to make better decisions

Let’s say you’re considering working overtime and making an additional $1,000 in a year.

If you know you’re in the 24 percent tax bracket, you’ll pay $240 in income tax on that extra money.

You’ll also pay 7.65 percent in Social Security and Medicare employee withholding, plus any state tax and other mandatory withholding.

Earning an additional $1,000 is a great idea, but don’t be surprised when you discover that one-third or more of your pay goes to taxes.

If you’re contemplating making a charitable contribution before the end of the year, knowing your income tax bracket and filing status can help determine how much your contribution will save you in taxes. However, that’s assuming you will itemize your deductions.

For example, if you’re in the 22 percent tax bracket, every $100 you contribute to charity saves you $22 in federal income taxes.

Knowing your tax rate also helps when you’re thinking about making retirement plan contributions. If you contribute to a traditional 401(k) plan or traditional IRA, you’ll reduce your state and federal income tax. In turn, that makes your contribution more affordable.

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