I applied for SSDI about 5 years ago. During the 5 years, I had no income. actually I was going into debt further and further every year. About six months ago I was awarded SSDI. I was also awarded three years back pay. It is quite a chunk of money and I am worried about having to pay taxes on this much money. I did read on the social security website that if you made more than $25,000 in Social Security in a year then you were required to pay taxes.
I am a single mother so I claim head of household and I have one child. I own a home. My income each month is about $3300, interest on my mortgage is about 14,000. I was awarded almost 100k in back pay.
Since the pay was for 3 prior years, can I go back and amend previous tax returns to show that money as income for those years? Or can I income average? Please excuse my ignorance, I know enough to be dangerous.
Also much of this money is going to be used to pay off the large debts incurred during those 3 years that I had no income. Can you help ?????