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What is Social Security disability back pay?

Back pay is an unofficial but widely used term for what the Social Security Administration (SSA) calls “past-due benefits,” payments to cover a period in which you were medically qualified for disability benefits but had not yet been approved to collect them.

Back pay is a common feature of disability claims largely because of how long they can take, particularly if an applicant is initially rejected and challenges the decision. If you win on appeal, a process that can take a year or more, Social Security will, in effect, make good on benefits you would have received had you been approved earlier.

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These past-due payments can go back as far as the date of your original application if the SSA ultimately determines that you met its definition of disability — being unable to do substantial paying work — at the time you filed the claim.

How back pay works

Suppose worsening arthritis sidelined you from your job Sept. 15, 2021. You applied Oct. 1 for Social Security Disability Insurance (SSDI) but your claim was denied. You appealed and eventually got a hearing with an administrative law judge.

Based on new evidence you were able to present at the hearing, the judge ruled in your favor, determining that your disability did indeed begin in September 2021. Based on your earnings history, Social Security calculates that you're entitled to an SSDI benefit of $1,300 a month. But now it's January 2023, and you haven't drawn a paycheck in more than a year.

That's where back pay comes in. Fifteen months elapsed from the time you became disabled — what the SSA calls your “onset date” — to when your claim was finally approved. By law SSDI benefits have a five-month waiting period — they start the sixth full month after the onset date — so you're entitled to 10 months of past-due benefits.

Social Security typically pays past-due SSDI in a lump sum within 60 days of the claim being approved. If a lawyer or other professional advocate represented you in your disability case, the SSA will pay their fee out of your back pay.

The SSA must approve your fee agreement with a lawyer or advocate in advance, and the fee is generally capped at $6,000 or 25 percent of back pay, whichever is less. In this case, with past-due benefits totaling $12,000, your representative would get up to $3,000 off the top.

You also can receive back pay for delays in applying for Supplemental Security Income (SSI), the other Social Security–run program that pays benefits to people with disabilities. (In the case of SSI, you also must have very limited income and financial assets to qualify.) However, the rules are a bit different.

With SSI, the start of payments is tied to your application date, not your onset date. And SSI has no waiting period, so your back pay will be calculated differently than for an SSDI claim. Also, if your past-due SSI is more than three times the program's maximum monthly payment ($914 in 2023), you won't get it in a lump sum. Instead, it will come in three installments at six-month intervals.

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Tax impact

Like all Social Security benefits, a portion of disability back pay may be taxable if your overall income exceeds a certain level. To minimize the chances of a large payment pushing you over that threshold, the IRS lets you refigure back pay that accrued in a previous year into that year's income for tax purposes, a method called “lump-sum election."

Box 3 of your SSA-1099 tax form will show the yearly breakdown of any past-due benefits you received, and IRS Publication 915, “Social Security and Equivalent Railroad Retirement Benefits," has instructions for apportioning back pay into prior years to potentially reduce your tax burden. But the formula is complicated, and you might want to use tax software or consult a tax professional if you choose to use lump-sum election.

Keep in mind

  • Back pay covers the months between application and approval. Because SSDI eligibility technically begins with your disability onset date, you may be eligible for additional “retroactive” benefits if you became disabled well before you applied. SSI is not retroactive.
  • A lawyer or advocate handling your disability claim may petition the SSA for a fee that exceeds the cap, particularly if an appeal goes beyond the hearing level. If Social Security approves the petition, it still pays 25 percent of back pay to the representative. You are responsible for any additional fees.

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