Fact Check: Do You Pay Taxes on SSI Benefits?

Fact Check: Do You Pay Taxes on SSI Benefits?
Fact Check: Do You Pay Taxes on SSI Benefits?

Sometimes it seems like we can’t have a single dollar bill in our hand without the government wanting to grab a bit of it. It doesn’t help that the US has such an incredibly complicated tax system. A whole industry of specialist accountants has grown out of the average American’s confusion about what’s taxable and what isn’t. That’s a worry for a lot of the poorest Americans, and one question we’ve been asked recently is about SSI. If you’re receiving SSI you won’t have a lot of money to spare, so are you going to need to hand a chunk of it back to Uncle Sam?

Highlights

  • SSI – Supplemental Security Income – isn’t the same thing as Social Security. It’s aimed at helping disabled, blind or people who have little or no other income. The idea is it helps pay for necessities like food, clothes and rent.
  • To get Social Security you need to have earned work credits, and it’s paid from a separate fund. To claim SSI you just need to meet the eligibility criteria, and the money comes from general federal taxes. SSI is an entitlement; you don’t have to earn it or have contributed to it. You do need to be a citizen or legal alien, and in most cases resident in the US.
  • SSI is a means-tested benefit. To get it you don’t just have to be elderly, disabled or blind; you also need to have resources of less than $2,000 and an income below a set level, which varies depending on state rules, living arrangements and the type of income.
  • The good news for recipients is that SSI isn’t considered as taxable income. If you get it, you keep it – the government doesn’t want any of it back.
  • Because SSI isn’t seen as taxable, it usually doesn’t count as “other income” when filing tax returns. There are some exceptions to this though, so if you have other money coming in as well as SSI you should get expert advice to make sure there are no tax implications.
  • It’s most complicated if you’re getting SSI but your spouse has other income. Usually, if you and your spouse have combined resources of more than $3,000 you won’t be eligible for SSI anyway, but again there are exceptions.

So there you are. You won’t have to pay any tax on SSI benefits, but in some circumstances you might have to declare them as income, and that could mean paying more tax on the rest of your money.