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I stand corrected,when did this become law is my next question because I have been told forever anything thats disability is not taxable income.


http://www.4socialsecuritydisability.com/taxes.html



Are Social Security Disability Benefits Taxable?
If you are approved for Social Security disability benefits, your benefits may be taxable. You may find yourself with tax obligations if you have other sources of income besides your disability payment, or if your spouse earns a substantial income.

If you file a federal tax return as an "individual" and your combined income* is between $25,000 and $34,000, you may have to pay income tax on 50 percent of your Social Security benefits. If your combined income is above $34,000, up to 85 percent of your Social Security benefits is subject to income tax.


- If you are married and file a joint return, you may have to pay taxes on 50 percent of your benefits if you and your spouse have a combined income that is between $32,000 and $44,000. If your combined income is more than $44,000, up to 85 percent of your Social Security benefits is subject to income tax.


- If you are married and file a separate tax return, you probably will pay taxes on your benefits. On your 1040 tax return, your "combined income" is the sum of your adjusted gross income, plus nontaxable interest, plus one-half of your Social Security benefits.

Your CPA or tax advisor can help you determine whether you will have income tax liability on your disability benefits and whether you need to set aside some of your benefits to pay estimated tax liability.