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

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

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

ND Medicaid 1619(b) Threshold for 2011

State 1619(b) Medicaid threshold amounts for calendar year 2011 have been published.

The North Dakota Threshold for 2011 is $38,049.

Section 1619(b) of the Social Security Act provides one of the most powerful work incentives currently available for SSI recipients: continued Medicaid eligibility for working individuals whose earned income is too high to qualify for SSI cash payments, but not high enough to offset the loss of Medicaid. The Social Security Administration uses a threshold amount to measure whether an individual’s earnings are high enough to replace his/her Medicaid benefits.

Source: POMS SI 02302.200

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

No Changes in COLA, SGA, etc for 2011

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

Services Covered by North Dakota Medicaid

Medicaid covers a specific list of medical services. Some covered services have limitations or restrictions. It is a recipient's responsibility to ask a medical provider whether a particular service being provided is covered by Medicaid. Do not assume that all of the medical services you receive are covered and paid by Medicaid. Non-covered medical services are the recipient's responsibility. The services listed below are a general listing, some covered services have limitations or restrictions.

Hospital

Inpatient: Covers room and board, regular nursing services, supplies and equipment, operating and delivery room, X-rays, lab and therapy.

Outpatient: Covers emergency room services and supplies, lab, X-ray, therapies, drugs and biologicals, and outpatient surgery.

Nursing Facility

Covers room and board, nursing care, therapies, general medical supplies, wheelchairs, and durable medical equipment.

Clinics, Rural Health Clinics

Covers outpatient medical services and supplies furnished under the direction of a doctor.

Hospice

Provides health care and support services to terminally ill individuals and their families.

Physicians

Covers medical and surgical services performed by a doctor; supplies and drugs given at the doctor's office; and X-rays and laboratory tests needed for diagnosis and treatment.

Prescription Drugs

Covers a wide range of, but not all, prescription drugs, insulin, family planning prescriptions, supplies, and devices. Requires a prescription from a doctor. Pharmacists can tell you if a particular drug is covered by Medicaid.

Chiropractor

Covers X-rays and manual manipulation of the spine for certain diagnosis.

Health Tracks (EPDST)

Covers screening and diagnostic services to determine physical and mental status, and treatment to correct or eliminate defects or chronic conditions and help prevent health problems from occurring for children under 21. Also covers orthodontia and vaccinations.

Home Health

Covers nursing care, therapy and medical supplies when provided in a recipient's home. Care must be ordered by a physician and provided by a home health agency.

Durable Medical Equipment and Supplies

Covers medical supplies such as oxygen and catheters and reusable equipment that is primarily medical in nature. Items must be medically necessary and do not include exercise equipment, personal comfort or environmental control equipment.

Dental

Covers exams, X-rays, cleaning, fillings, surgery, extractions, crowns, root canals, dentures (partial and full) and anesthesia.

Family Planning

Covers diagnosis and treatment, drugs, supplies, devices, procedures and counseling for persons of child bearing age.

Sterilization

Covers sterilization procedures if: (1) The recipient is at least 21 years old; (2) The recipient is legally competent; (3) The recipient signs an informed consent form; and (4) At least 30 days but not more than 180 days have passed between the signing of the consent form and the sterilization.

Podiatry

Covers office visits, supplies, X-rays, glucose and culture checks, and surgery procedures.

Mental Health

Covers psychiatric and psychological evaluations, inpatient services in a psychiatric unit of a hospital, individual-group-family psychotherapy, partial hospitalization services, and inpatient psychiatric and residential treatment centers services for individuals under 21 for the care and treatment of metal illness or disorders.

Ambulance

Covers ground and air ambulance trips, attendant, oxygen, and mileage when medically necessary to transport a recipient to the closest health care facility meeting his needs. House Bill 1282 permits ambulance personnel to refuse transport to an individual where medical necessity cannot be demonstrated and recommend an alternative course of action for the individual. If the ambulance was not medically necessary, Medicaid will not pay for the service.

Transportation

Covers non-emergency transportation services to and from the recipient's home to the closest medical provider capable of providing a medically necessary examination or treatment.

Vision

Covers exam, glasses, frames and some hard contact lenses for the correction of certain conditions. Replacement eyeglasses may only be provided after a minimum of 12 months for children under 21 or 36 months for adults if a lens change is medically necessary. An exception to the replacement limitation may be made if new eyeglasses are required for a significant change in correction and the eyeglasses are prior approved. Lost or broken glasses for individuals over 21 will not be replaced within the first three years.

Therapies

Covers physical and occupational therapy and speech and language pathology.

Waivered Services - Home and Community Based Services, Traumatic Brain Injury

Provides personal care and other services not otherwise covered under the Medicaid program to individuals who are at risk of institutionalization in a nursing facility.

Out-of-State Services

Medically necessary covered services may be provided outside of North Dakota if the services are not available within North Dakota and have been prior approved by the department or if the services are provided in an emergency situation.

Source: Website of the North Dakota Department of Human Services at http://www.nd.gov/dhs/services/medicalserv/medicaid/covered.html.

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

How do payments from Programs for Older Americans affect SSA disability benefits?

Beneficiaries aged 55 and older who are working under government-sponsored training programs, referred to as Programs for Older Americans, or Senior Community Service Employment Programs (SCSEP), need accurate information as to how wages and other payments under these programs affect SSA disability benefits. In order to know this, it is important to understand the relevant POMS citations in both the Title II and SSI programs.

These programs are established in chapter 35 of title 42 of the U.S. Code, Programs for Older Americans. There are different programs established under the Older Americans Act, such as Foster Grandparents, and volunteer programs. The focus of this entry is employment programs. Here is a summary of Chapter 35, subchapter IX:

Programs for Older Americans, Subchapter IX – Community Service Employment Program

This program was established to foster individual economic self-sufficiency and promote useful opportunities in community service activities, including community service employment, for individuals who meet the eligibility criteria. Criteria include: age 55 or older, has

income of not more than 125% of the poverty level (excluding income that is unemployment compensation, SSI, veteran’s benefits paid from the VA, or 25% of SSA Title II benefits). The program also ensures that safe and healthy conditions are provided and will ensure that the participants will be paid wages that shall not be lower than whichever is highest of: the minimum wage under the Fair Labor Standards Act, the state or local minimum wage, or the prevailing rates of pay for individuals in similar public occupations by the same employer.

Here is a link for more information about Chapter 35: http://www.law.cornell.edu/uscode/html/uscode42/usc_sup_01_42_10_35.html

Under the Title II program, (SSDI, CWB, DWB), the relevant POMS citation that provides information about evaluating payments under these programs is DI 10505.025 – Special Employment Situations.

Here is the relevant section:

1. Job training and employment programs

a. General

Federal funds have been made available to State and local agencies to provide job training and employment opportunities for economically disadvantaged, unemployed and underemployed people to prepare them to function acceptably in various kinds of competitive employment.

b. Documentation and evaluation

The work activity of a person in a government-sponsored job training program must be evaluated under the usual criteria for earnings and services as discussed in DI 10505.001 through DI 10505.020, in order to determine whether he or she is engaging in SGA. A decision as to whether the work is SGA, and when such SGA may have begun, should be based on information as to the person's “countable earnings” and performance. Workers under any of these programs should not, therefore, be treated as a group. Rather, each case should be evaluated on its own merits.

The “countable earnings” of a person involved in a government-sponsored job training program are determined in the same manner as for all types of employees, as discussed in DI 10505.001. It should be noted, however, that subsidies are frequently involved in work for such programs. It is important, therefore, to consider this possibility and, when appropriate, to develop thoroughly the issue of subsidy in accordance with DI 10505.010A.

If, after the issue of subsidy (and/or impairment-related work expenses (IRWE)) is resolved, a person’s “countable earnings” are not more than the amount shown in the SGA Earnings Guidelines, and if the work does not meet either the test of comparability or the test of worth of work in circumstances where these tests apply (see DI 10505.020C.), the work activity will not be found to represent SGA. (See DI 10505.015 for when averaging earnings applies.)

Under some government-sponsored programs, part of the participant's time may be devoted to on-the-job training. Whether the person's activity is all work or whether such training is also involved, all of the SGA tests as discussed above apply.

For purposes of charging months of the trial work period (TWP), the provisions in DI 13010.050 apply.

In other words, under the Title II program, the work activity of a beneficiary participating in a program for older Americans will be evaluated in the same manner as other employment situations, with special attention paid to the possibility of subsidy. Payments that do not reflect work activity, such as reimbursement for expenses, would not be counted.

Under the SSI program, there may be a distinction between earned and unearned income, and what income is “countable”. The relevant citation here is: SI 00830.640 Programs for Older Americans:

A. INTRODUCTION

The Federal Government through the Administration on Aging is involved in a variety of programs for older Americans. The programs may be operated by State or local governments or community organizations. Some types of programs are:

· health services;

· nutrition services (see SI 00830.635);

· legal assistance; and

· community service employment.

B. POLICY

1. Wage or Salary

A wage or salary paid under chapter 35 of title 42 of the U.S. Code, Programs for Older Americans, is earned income subject to the general SSI policies on earned income.

2. Not a Wage or Salary

Anything provided under chapter 35 of title 42 of the U.S. Code, Programs for Older Americans, other than a wage or salary is excluded from income.

C. PROCEDURE

1. Verify Program

Use documents in the individual's possession, contact with the provider or a local council on aging, or a precedent to verify that the program is funded by the Federal Government under chapter 35 of “The Older Americans Act ” and whether a wage or salary is paid.

2. Wage or Salary

See SI 00820.100 ff.

3. Not a Wage or Salary-Accept Allegation

Accept the individual's allegation of receipt of anything other than a wage or salary and exclude it without further development unless you have reason to question the allegation.

To summarize, wages that an SSI beneficiary receives through a program for older Americans would count as earned income, and all of the earned income exclusions would apply. Any other type of payment would not count either as earned or unearned income. This is great news for SSI beneficiaries, as earned income is treated more favorably than unearned income under this program.

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

SSA ISSUES FAVORABLE NEW REGS

SSA has issued new regulations that incorporate improvements to the Supplemental Security Income (SSI) program required by the HEART Act (Heroes Earnings Assistance and Relief Tax Act of 2008). The HEART Act changes, in a positive manner, the way SSA treats certain cash payments to members of the uniformed services and veterans and cash and in-kind payments to AmeriCorps volunteers.

These include:

State Annuities for Blind, Aged, or Disabled Veterans

Before the HEART Act, SSA counted State annuity payments as income in the

month received, and as a resource if retained into the following month. SSA

is revising sections 416.1124 (Unearned income not counted) and 416.1210

(Exclusions from resources; general) to reflect section 202 of the HEART Act

and exclude, for SSI eligibility and benefit determinations, annuity

payments that a State pays to a person (or his or her spouse) because the

State has determined that the person is: A veteran; and Blind, disabled, or aged.

Under section 202 of the HEART Act, SSA excludes these payments from income

for the month received and from resources beginning with the month after the

month received.

AmeriCorps State and National and AmeriCorps NCCC Payments

Prior to the HEART Act, SSA treated cash or in-kind payments from the

AmeriCorps State and National and AmeriCorps NCCC programs as countable

income. SSA is revising sections 416.1112 (Earned income not counted) and

416.1124 (Unearned income not counted) to reflect section 203 of the HEART

Act. For SSI eligibility and benefit determinations, SSA will exclude from

countable income any cash or in-kind payments to program participants or on

the AmeriCorps participants behalf. Such payments may include, but are not

limited to: Food and shelter, stipends, living allowance payments, clothing

allowances, educational awards, and payments in lieu of educational awards.

These welcome regulations became effective on September 7, 2010

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

A FREE WISE WEBINAR HIGHLIGHTING SUPPORTS AND SERVICES FOR TICKET HOLDERS WITH MENTAL HEALTH DISABILITIES

JUNE 23, 2010 FROM 3:00 – 4:30 PM (EASTERN)

If you are a person with a mental health disability interested in learning about the Ticket to Work Program or other Social Security Work Incentives, you can attend a FREE Web-based education event on work incentives! This first-ever Mental Health Work Incentive Seminar Event (WISE) Webinar will feature presentations by people who know the ins and outs of all available work incentives, including the Ticket Program. A success story of a Social Security beneficiary who used work incentives successfully will be shared. We will also be joined by a mental health peer counselor who currently works encouraging other people with mental health disabilities in their recovery through work.

Want specific information on how work and work earnings will impact your personal Social Security disability benefits? Please visit www.ssa.gov/work or www.choosework.net to get more information and to find a list of resources available in each state, including the Work Incentives Planning Assistance (WIPA) projects, professionals who can provide more information on your individual situation.

Register for this free WISE Webinar or find WISE events in your area at www.cessi.net/wise.

Approximately 2 days before the event, all those who have registered will receive an e-mail message with instructions on how to log in to the Webinar.

If you have questions, please email wise@cessi.net or call 1-877-743-8237 (v/tty).

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

Adoption Assistance - SSI

I wanted to let you know about a Policy Instruction announcement that was recently released by SSA. These policy changes, announced on 6/1/2010, can be found in the SSA POMS SI 00830.415, entitled, “Adoption Assistance.”

This transmittal includes a change in policy regarding how certain types of adoption assistance are counted as unearned income for the purposes of the SSI program.

Background

The Fostering Connections to Success and Increasing Adoptions Act was signed into law in October 2008. The Act amends section 473 of the Social Security Act and emphasizes the promotion of permanent families for children and youth in foster care. This section was revised to include that effective 10/1/09 adoption assistance payments under Title IV-E for an “applicable child” are treated as unearned income and are subject to the $20 general income exclusion. This section was also revised to include that effective 10/1/09, Kinship Guardianship Assistance payments are not subject to the $20 general income exclusion and are counted dollar for dollar.

To read the Policy Instruction, click HERE.

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

Pathfinder Conference - Links on Special Needs Trusts

Met Life

Special Needs Planners

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

Bill Proposed to Raise SSI Asset Limit

On March 24th, Congresswoman Tsongas (D-MA), along with Congressman Petri (R-WI), introduced the SSI Savers Act of 2010 (H.R. 4937) proposing to reform the asset test in the Supplemental Security Income (SSI) program, the primary provider of subsistence cash to extremely low-income individuals, seniors, and people with disabilities.

In general, eligibility for SSI is limited to those who have assets of $2,000 or less for an individual and $3,000 or less for a couple. The SSI test generally counts all resources deemed accessible to an individual, including defined-contribution retirement accounts, such as 401(k)s and IRAs, under the asset limit.

H.R. 4937 proposes to remove savings disincentives in SSI by:

• Raising the asset limit to $5,000 for single and $7,500 for joint tax filers and indexing these limits for inflation;
• Excluding retirement savings from inclusion in the asset test for noninstitutionalized individuals under the age of 65;
• Excluding savings in qualified retirement accounts below a specified ceiling of (indexed for inflation) $10,000 for an individual and $15,000 for a couple or household for noninstitutionalized individuals age 65 or older;
• Disregarding one third of the funds drawn down from retirement accounts when calculating household income for noninstitutionalized individuals age 65 or older;
• Removing the requirement that SSI recipients, if eligible, must apply for periodic payments from their retirement savings, and;
• Excluding Education Savings Accounts and Individual Development Accounts funded all or in part with federal dollars or defined in federal programs for those under age 65.

For more information go to http://www.washingtonwatch.com/bills/show/111_HR_4937.html

Source: Justice for All http://jfactivist.typepad.com/jfactivist/current_affairs/

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

Effect ‘American Recovery and Reinvestment Act of 2009’ has on SSI

On February 17, 2009, the President signed the “American Recovery and Reinvestment Act of 2009” (ARRA). ARRA includes several provisions that may affect an individual’s or couple’s Supplemental Security Income (SSI) eligibility or payment amount. Below is a link to the policy and procedures for how to treat the payments that result from the following provisions:

• The one-time $250 Economic Recovery Payment (ERP).

• The Making Work Pay (MWP) tax credit for tax years 2009 and 2010.

• An increase of $25 weekly in an individual’s unemployment compensation benefit.

• The first-time homebuyer’s tax credit and deemed first-time homebuyer’s tax credit.

The full description can be found HERE


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

FAQ's About Taxes and SSA Disability Benefit Programs

These common questions about taxes and disability benefits that we hear as CWIC's around this time of the year are worth a lengthy post.

The text below was produced by our National Training Center at Virginia Commonwealth University and, although a bit lengthy - it is quite thorough.

If you have a question about taxes and SSA disability benefits, there's a good chance you'll find it here. If you can't find it here, please feel free to contact me.
--------------------------------------------------------------------------------------------------

QUESTION: I have been getting services from my local Work Incentives Planning and Assistance (WIPA) project – can my CWIC help me with tax issues related to my disability benefits?

Your CWIC can offer you some very general information about certain tax issues related to SSA disability benefits, but the assistance provided will be very limited. CWICs are not qualified tax professionals and are not trained to assist with tax issues – even those related to SSA disability benefits. Your CWIC will probably refer you to either the IRS or a local tax professional if you have questions requiring a response beyond what is contained in this document.

QUESTION: Are my disability benefits taxable?

Well, that depends on which benefits you get and how much your total income is. If you receive Supplemental Security Income (SSI), you will owe no Federal or State taxes on this benefit. If you have other forms of income in addition to your SSI (such as wages) you may owe taxes on that income.

If you receive a title II disability benefit (SSDI, CDB or DWB), then you may have to pay taxes on your benefits, depending on how much your total income is. SSA reports that about one-third of their current beneficiaries do pay taxes on their benefits. Here are the situations in which taxes may be due:

· If you file a federal tax return as an “individual” and your income is more than $25,000, you have to pay taxes.

· If you file a joint return, you may have to pay taxes if you and your spouse have a combined income that is more than $32,000.

· If you are married and file a separate return, you will probably pay taxes on your benefits.

Beneficiaries who are unsure about whether or not they have to pay taxes should contact the Internal Revenue Service (IRS) or seek the services of a qualified tax professional.

­­­­­­­­­­­­­­­QUESTION: I am getting a Federal income tax refund this year. Do I need to report this to SSA?

No, you do not need to report this no matter whether you are on SSI or a title II disability benefit.

Federal and/or State income tax refunds are specifically disregarded as a form of income by the SSI program. This is because SSI counts your gross income when it is received so your SSI check has already been adjusted without regard to any taxes withheld. However, if you retain your income tax refund and your countable resources exceed the limit ($2,000 for an individual or $3,000 for a couple) you could become ineligible for SSI and Medicaid.

NOTE: Income tax refunds are not income for SSI purposes even if the income taxes were excluded from countable income as Blind Work Expenses.

In the title II program, SSA is only interested in earned income – money you receive in exchange for work performed. Income tax returns would not be considered earned income. Since the title II program is a form of insurance which is not means-tested in any way, resources are never considered. Putting your refund in the bank would have no affect on your benefits.

QUESTION: I will be getting an Earned Income Tax Credit payment this year – is that something I need to report to SSA?

The earned income tax credit (EITC) is a special tax credit that reduces the Federal tax liability of certain low income working taxpayers. This tax credit sometimes results in a payment to the taxpayer, either as an advance from an employer or as a refund from IRS. For more detailed information about the EITC go to the IRS website at: http://www.irs.gov/individuals/article/0,,id=96466,00.html

The Earned Income Tax Credit (EITC) is not counted as income for either the SSI program or the title II disability benefits and does not need to be reported to SSA. In addition, for the SSI program, any unspent Federal tax refund or payment made by an employer related to an EITC that is received on or after 3/2/04 is excluded from resources for the 9 calendar months following the month the refund or payment is received. For more information, refer to POMS SI 01130.675 Tax Advances and Refunds Related to Earned Income Tax Credits and Child Tax Credits.

NOTE: These same rules apply to the Child Tax Credit (CTC). The child tax credit (CTC) is a special refundable Federal tax credit that is available to certain low income taxpayers with earned income. They must be parents, step-parents, grandparents or foster parents with a dependent child. This child tax credit may provide a refund to individuals even if they do not owe any tax. The CTC may result in a tax refund payment to the taxpayer from IRS beginning with tax year 2001. There is no advance payment with the CTC.

­­­­­­­­­­­­­­

QUESTION: Is it possible for the IRS to take some of my disability benefit check if I owe money for delinquent taxes?

Yes, this is possible – but only with title II disability benefits. The SSI program does not permit garnishment, attachment or levies against payments for any reason since the assumption is that persons on SSI have very little income or resources. Effective 7/1/89, the Taxpayer's Bill of Rights (P.L. 100-647) specifically prohibits IRS levies against SSI payments.

In the title II program, the IRS may take a portion of your monthly benefit payment to recover delinquent taxes. IRC Section 6331 states that individuals and businesses with delinquent tax liabilities may be subject to a continuous 15% levy against funds owed them by the federal government (including SSA benefits) beginning in July 2000. To do this, the IRS has to file something called a “Notice of Levy” with the SSA. A Notice of Levy is continuous until the IRS tells SSA to stop levying. In processing levies, SSA is merely acting to assist IRS in its duty to collect delinquent taxes. Except for seeing that the processing requirements are met, SSA has neither the authority nor obligation to question the correctness of an IRS levy.

If a levy is received for an individual who is receiving benefits on behalf of someone else as a representative payee, it will be returned to the IRS. SSA can only levy an individual’s own benefits.

A taxpayer whose title II disability payments are subject to levy may contact the IRS to resolve the issue by paying the tax bill, entering into an installment agreement or proposing an offer in compromise. For more information about SSA’s role in processing IRS levies, refer to POMS GN 02410.100 - Internal Revenue Service (IRS) Levy.

QUESTION: Can I have taxes withheld from my Social Security Disability Benefits?

Yes, this is possible. Public Law No.103-465 amends the Internal Revenue Code (IRC) to allow individuals to request that monies be withheld from certain Federal payments to satisfy their Federal income tax liability. An amendment to Section 207 of the Act allows this withholding from title II benefits. SSA refers to this process as “Voluntary Tax Withholding” or VTW. All title II beneficiaries (adults as well as children) are eligible for VTW. However, only the beneficiary or his/her representative payee can request VTW. Voluntary Tax Withholding does NOT apply to SSI payments and there is no way to have State income taxes withheld from any SSA benefit.

Beneficiaries (or their representative payees) need to complete and sign IRS form W-4V (Voluntary Withholding Request) for a VTW request to be valid. This includes a request to stop and as well as start VTW. The withholding rates set by IRS are 7%, 10%, 15%, and 25%. Only these percentages can be used. No other percentages or flat dollar amounts are acceptable. Beneficiaries can start or stop VTW at any time. For more information on VTW processes, refer to POMS GN 02410.015 - Voluntary Tax Withholding (VTW).

QUESTION: Are there special tax deductions that people with disabilities can claim?

Yes, the IRS rules contain myriad deductions and exemptions related to disability and these would apply equally to SSI recipients and title II disability beneficiaries. There are far too many special rules for people with disabilities to describe in this document, but a helpful overview may be found in IRS Publication 907 – Tax Highlights for Persons with Disabilities. This pamphlet can be found online at: http://www.irs.gov/pub/irs-pdf/p907.pdf.

In addition to these IRS rules, many States offer additional income tax deductions and some city and county governments offer discounts on property taxes or special taxes such as fees charged for fishing or hunting licenses. Beneficiaries are encouraged to search online for State and local deductions related to disability, or to seek the assistance from a qualified tax professional.

QUESTION: I will be receiving the first-time homebuyer’s tax credit at the end of the year- Is that something I need to report to SSA?

Homebuyers who purchased a home in 2008, 2009 or 2010 may be able to take advantage of the first-time homebuyer credit. The credit applies only to homes used as a taxpayer's principal residence, reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar, and Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed. For more information, see http://www.irs.gov/newsroom/article/0,,id=204671,00.html.

Yes, for the purposes of the SSI program, this tax credit is considered to be countable income. It would also count as a resource in the month after it was received.

In the title II program, SSA is only interested in earned income – money you receive in exchange for work performed. Tax credits would not be considered earned income. Since the title II program is a form of insurance which is not means-tested in any way, resources are never considered. Putting your tax credit in the bank would have no affect on your benefits.


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

How Earnings Affect Your SSI Payments

The amount of your SSI payments is based on how much other income you have. When your other income goes up, your SSI payments usually go down. So when you earn more than the SSI limit, your payments will stop for those months. But, your payments will automatically start again for any month your income drops to less than the SSI limits. Just tell Social Security if your earnings are reduced, or if you stop working.

If your only income besides SSI is the money you make from your job, then Social Security does not count the first $85 of your monthly earnings. Social Security deducts from your SSI payments 50 cents of every dollar you earn after the $85 deduction. (The $85 deduction is made up of a $20 per month general income exclusion, which is first applied to any unearned income, and a $65 per month earned income exclusion).

Example: You work and earn $1,000 in a month. You receive no other income besides your earnings and your SSI.

$1,000 - $85 = $915

$915 ÷ 2 = $457.50

Social Security would deduct $457.50 from the maximum SSI ­payment that you may receive as an individual, which is $674 in 2010. You would therefore receive an SSI payment of $216.50 for the relevant month.

By working, you would have gross income of $1,216.50 ($1,000 of gross earnings plus SSI of $216.50). If you do not work, you would just have an SSI payment of $674.

This information was taken from the SSA Publication, “Working While Disabled—How We Can Help.” The earnings rules are different for SSDI benefits.

NOTE: It is important to keep in mind that certain "Work Incentives" may be available to help lower one's countable earnings that are used for the above SSI calculation. This results in an increase cash payment to the beneficiary. To explore all available "Work Incentives" that may be available, please contact your area CWIC.

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