Question: Is Rental Income Earned Income?

In most cases this question relates to a beneficiary who owns a house that he/she rents out, or when a beneficiary lives in a house and rents out a room or owns a duplex that he/she lives in and rents out the other unit.

The basic rule of thumb in cases like these is that net rental income counts as unearned income (meaning not subject to FICA per POMS Section RS 02505.240) unless it is earned income from self-employment (e.g., someone who is in the business of renting properties). This is actually stated very clearly for SSI recipients in the POMS.

Of course, for SSI recipients, unearned income is treated less favorably than earned income since only the $20 General Income Exclusion is applied to unearned income. In addition, if the SSI recipient owns a home which he/she does not live in because it is rented out, then the property would be a countable resource.

If the SSI recipient is actually self-employed and in the business of renting property, then any Net Earnings from Self-Employment (NESE) the business generates would be decreased by any applicable work incentives when SSA is determining countable NESE. The countable NESE would affect the SSI cash payment in the usual manner.

On the Title II side, it is more complicated. There is no specific citation in the DI section of the POMS saying that rental income is not counted as earned unless the beneficiary is self-employed in the business of renting properties. This is implied when SSA defines what to count by describing earnings or self-employment income as income a person receives in exchange for his/her work activity – it is remuneration for work performed. In most cases, simply renting out one’s home or a portion of one’s home would not constitute work activity – it is too passive and is not subject to FICA. Unless a beneficiary is engaged in the business of renting property, the money received from renting a single house would typically NOT be considered earned income. If the rental income is not considered to be earned, then it would not be considered when SSA makes TWP or SGA determinations.

Of course, there are times when the situation becomes more complicated. What if the person rents out multiple pieces of property – does that mean the person is in the rental business? SSA must make the decision on a case-by-case basis. They first look to see if the beneficiary is engaged in “trade or business.” To make this determination, the SSA asks the following questions:

· Is there a good faith intention of making a profit or producing income?

· Is there continuity of operations, repetition of transactions, or regularity of activities?

· Are the functions being performed a regular occupation or profession?

· Is the beneficiary holding himself out to others as being engaged in the selling of goods or services?

(From POMS Section RS 01802.002)

SSA is looking for an overall pattern with these questions. One ‘yes’ answer to these questions is insufficient to make a determination of self-employment, but they need not all be answered with “yes” for self-employment to be determined to exist. If SSA determines that the beneficiary is self-employed, any countable NESE from the business will be considered during TWP and SGA determinations.

REMEMBER: Determinations of what is or is NOT earned income can only be made by SSA. If there is any doubt, refer the beneficiary to the local Social Security Field Office for clarification. If the beneficiary does not agree with the determination rendered by SSA, he/she may request reconsideration as part of the standard appeals process.

Any questions may be directed to: rsi5@srt.com

Trial Work Period (TWP) in a Nutshell

The TWP allows you to test your ability to work for at least 9 months. During your TWP, you will receive full SSDI benefits regardless of how high your earnings might be, as long as you report your work activity and you have a disabling impairment.

Your TWP starts the first month you are entitled to SSDI benefits or the month you file for benefits, whichever is later. The TWP continues until you accumulate 9 months (not necessarily consecutive) in which you perform what we call “services” within a rolling 60-month period. We use this “services” rule only to count TWP months.

In 2011, we consider your work to be “services” for the TWP if your gross earnings are more than $720 a month, or if you work more than 80 hours in self-employment in a month.

When your TWP is complete, you may become eligible for other employment supports and we consider whether any of them apply to your situation.

Kjellan Loe
Rehab Services, Inc.


Any questions may be directed to: rsi5@srt.com

Will SSDI Always Be There For ME?

2011 Open Enrollment Period for Medicare Part C and Part D

Every year, you have a chance to make changes to your Medicare Advantage (Medicare Part C) or Medicare prescription drug (Medicare Part D) coverage for the following year. Last year, the open enrollment period was from November 15, 2010 – December 31, 2010. For 2011, the open enrollment period is earlier, as indicated below.

Enrollment Period: October 15, 2011 – December 7, 2011.

What You Can Do in This Enrollment Period:

· Change from Original Medicare to a Medicare Advantage Plan.

· Change from a Medicare Advantage Plan back to Original Medicare.

· Switch from one Medicare Advantage Plan to another Medicare Advantage Plan.

· Switch from a Medicare Advantage Plan that doesn’t offer drug coverage to a Medicare Advantage Plan that offers drug coverage.

· Switch from a Medicare Advantage Plan that offers drug coverage to a Medicare Advantage Plan that doesn’t offer drug coverage.

· Join a Medicare Prescription Drug Plan.

· Switch from one Medicare Prescription Drug Plan to another Medicare Prescription Drug Plan.

· Drop your Medicare prescription drug coverage completely.

Source: Understanding Medicare Enrollment Periods – Tip Sheet. http://www.medicare.gov/Publications/Pubs/pdf/11219.pdf

Any questions may be directed to: rsi5@srt.com

Health Care Reform Explained

There remains confusion about what the Affordable Care Act did, is doing and will do. This 9 minute cartoon does a very good job of explaining things. Use at will:

Any questions may be directed to: rsi5@srt.com

Webinar for Young Workers

Young adults aged 18 to 24 will want to tune in to our upcoming webinar, "Social Security 101: What's in it for me?" The webinar will tell them everything they need to know about Social Security. Most young adults don't realize that we do more than pay retirement benefits and issue Social Security cards. Social Security provides disability benefits to covered workers, as well as benefits to dependent family members of workers who die. Young people also may not know how the Social Security system works — how it's funded, what a FICA tax is, or how to qualify for benefits.

The broadcast starts at 3 p.m. EST on Thursday, March 10, and will feature a brief presentation followed by an interactive question-and-answer period. We'll be posting the recorded session on our website for those who miss the live broadcast. Visit the link below to register! www.socialsecurity.gov/webinars/

Any questions may be directed to: rsi5@srt.com

The Red Books Are Coming!!!

The electronic version of the 2011 Red Book is now available on the Social Security Administration website:

http://www.socialsecurity.gov/redbook/

The Red Book is a publication of the Social Security Administration that describes employment supports and work incentives for persons with disabilities under the Social Security Disability Insurance and Supplement Security Income programs.

Any questions may be directed to: rsi5@srt.com

Social Security Tax drops from 6.2 to 4.2 Percent

For 2011, the Social Security tax rate is 4.2 percent for employees, 6.2 percent for employers, and 10.4 percent for self-employed people. These rates apply to earnings up to the maximum taxable amount ($106,800 in 2011).

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reduced 2011 Social Security tax rates for employees and self-employed people by two percentage points.

Learn more about the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 at the White House website.

www.whitehouse.gov/taxcut

Any questions may be directed to: rsi5@srt.com

Social Security Invites the Public to Comment on its Regulations

Michael J. Astrue, Commissioner of Social Security, today announced a new way for members of the public to participate in open and transparent government. In response to President Obama’s executive order on improving regulations and regulatory review, Social Security is inviting people to provide direct feedback on its rules and regulations. Ideas and comments may be emailed to RegsReview@ssa.gov.

“Social Security values the public’s input and wants to provide a meaningful opportunity for people to participate in the regulatory process,” Commissioner Astrue said. “I invite the public to share their thoughts and I am excited to hear their ideas.”

Social Security’s program rules are available online and may be accessed a www.socialsecurity.gov/regulations. There, you will find complete information about Social Security’s laws, regulations, rulings, and employee operating instructions.

For information about what Social Security is doing to improve its regulations and how the agency will implement the President’s executive order, go to the Open Government website: www.socialsecurity.gov/open/regsreview/.

Any questions may be directed to: rsi5@srt.com

IRWE for Transportation Provided By Parent

Question:

"I receive SSDI and SSI benefits and my medical impairment prevents me from driving a motor vehicle. My mother drives me to and from my place of employment, which is about 10 miles from my home. Can I deduct any of the transportation costs from my earnings to lessen the impact that my earnings have on my SSDI and SSI benefits?"

Answer:

Maybe. An impairment-related work expense (IRWE) can be useful to beneficiaries of Social Security Disability Insurance (SSDI) and to recipients of Supplemental Security Income (SSI). If you receive SSDI benefits, the Social Security Administration will deduct the IRWE when it determines whether you performed substantial gainful activity. Also, if you receive SSI, the SSA will exclude the IRWE from your earned income when figuring the monthly SSI payment to you.

In limited situations, you may deduct from your gross earnings an IRWE for transportation costs when the transportation is provided by a family member. If a person with a disability pays a member of his family to drive him or her to and/or from work, such payment will generally not be deductible as an IRWE unless:

· It is established that the family member has been otherwise employed and suffers economic loss by reducing the number of work hours or terminating his or her own employment in order to perform such service; and

· The payment is made to the family member in cash (including checks or other forms of money); payment in kind (e.g., room and board) is not deductible.

Source: The Social Security Administration’s Program Operations Manual System (POMS) DI 10520.010D.3.5 and DI 10520.030H.

Any questions may be directed to: rsi5@srt.com