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<p>Sorry guys, but you’re both sort of right…
For Social Security disability – if one spouse is working and one is disabled, some of the SS disability money <em>may</em> be included as taxable income on the couple’s tax forms. It depends on how much the healthy spouse earns. The part that is taxable is also declared on your FAFSA form (it’s part of your AGI (adjusted gross income)).</p>
<p>Here’s the IRS worksheet so you can determine what, if anything is taxable.
[Publication</a> 17 (2011), Your Federal Income Tax](<a href=“http://www.irs.gov/publications/p17/ch11.html]Publication”>http://www.irs.gov/publications/p17/ch11.html)</p>
<p>I suspect, since the OP’s dad only earns $9700 then the SS disability income won’t be taxed.</p>
<p>Edit to add: the above information is only for Social Security disability. Some people have private disability insurance, which may be treated differently.</p>