Most applications for Social Security Disability benefits are not immediately approved, and applicants may wait for two years for a final decision.
Even after approval, the backlog of cases in nearly every local Social Security Administration office means that some recipients don't receive their first payments until months or even a year after approval.
The upside to this unfortunate reality is that Social Security Disability benefits include back pay for most or all of that time spent waiting, in the form of a single lump sum. This sum can be substantial, depending on the amount of benefits approved.
Individuals who have received 'lump sum payments' in other situations have been dismayed to learn that their payments were taxed at a higher rate than they expected, or threw off their 'Annual Income' for the year and raised their tax bracket.
This may make the prospect of receiving a similar lump sum from the Social Security Administration a bit more stressful than it would be otherwise.
Is Social Security Disability back pay taxable?