What is Considered Income for SSI?

Imagine relying on a fixed income that barely covers your basic needs. Now, imagine that even a small financial gift from a friend or a modest inheritance could reduce or eliminate that income. That’s the reality for millions of people who rely on Supplemental Security Income (SSI) in the United States. SSI is a program designed to assist elderly, blind, or disabled individuals with limited income and resources. It’s a lifeline for those who qualify, but it comes with a significant caveat: the amount of money you receive can be dramatically affected by other income. But what exactly counts as income for SSI, and how can you navigate these complex rules without jeopardizing your benefits?

Understanding the Basics: What Is SSI?

Supplemental Security Income (SSI) is a federal income supplement program funded by general tax revenues (not Social Security taxes). It’s intended to help aged, blind, and disabled people who have little or no income by providing cash to meet basic needs for food, clothing, and shelter. However, SSI isn’t as straightforward as it seems. There are strict limits on the amount of income and resources an individual can have to qualify for SSI. And not all income is treated equally under SSI rules.

Income and SSI: A Complex Relationship

Income is anything you receive that can be used to meet your needs for food and shelter. But under SSI, income isn’t just about money from a job. It’s defined broadly and includes both earned and unearned income.

Earned Income:

• Wages: Money you earn from work, whether it’s full-time, part-time, or even self-employment.
• Net earnings from self-employment: Your income after business expenses.
• Payments for services: Such as freelance work, side gigs, or any payment received for work performed.

Unearned Income:

• Social Security benefits: If you receive Social Security Disability Insurance (SSDI) or retirement benefits, they count as unearned income.
• Pensions and annuities: Regular payments from retirement funds or investments.
• Unemployment benefits: Any compensation received for being unemployed.
• Workers' compensation: Payments due to a work-related injury or illness.
• Dividends, interest, and royalties: Income from investments, savings accounts, or intellectual property.
• Gifts and inheritances: Even a financial gift or a small inheritance can affect your SSI.
• Support and maintenance: If someone helps you with living expenses, such as paying your rent or utility bills.

But SSI also considers what is known as "in-kind income"—non-cash items like food or shelter that someone else provides for you. For instance, if a family member allows you to live in their home rent-free, that could be counted as income and reduce your SSI benefits.

Exclusions and Special Rules

The Social Security Administration (SSA) allows for certain income exclusions. These exclusions are vital because they can help you maintain your SSI benefits even if you have some income.

• General income exclusion: The first $20 of most income received in a month is not counted by the SSA.
• Earned income exclusion: The first $65 of earned income received in a month, plus one-half of the remaining earned income, is not counted.
• Student earned income exclusion: If you are under age 22 and regularly attending school, some of your earnings may not count.
• Impairment-related work expenses: For those with disabilities, certain expenses related to work, such as transportation or special equipment, can be excluded from earned income.
• Plan to Achieve Self-Support (PASS): If you have a disability and are working toward a specific employment goal, money set aside in a PASS plan does not count as income.
• Tax refunds and credits: Tax refunds, including the Earned Income Tax Credit (EITC), do not count as income.

Despite these exclusions, managing income while on SSI is tricky. Even small amounts of unearned income can have a significant impact on your benefits.

The Impact of Income on SSI Benefits

SSI benefits are calculated based on the Federal Benefit Rate (FBR), which is adjusted annually. For 2024, the FBR is $914 per month for an individual and $1,371 per month for a couple. However, this amount can be reduced by what the SSA considers countable income.

Here’s how it works: The SSA takes your total income (earned and unearned) and subtracts any applicable exclusions. The remaining amount is your countable income. Your SSI benefit is then calculated by subtracting your countable income from the FBR.

For example, if you have $500 in countable income, your SSI benefit would be $414 ($914 - $500). If your countable income exceeds the FBR, you won’t receive any SSI benefits that month.

Reporting Income to the SSA

To avoid any surprises, it’s crucial to report all income to the SSA. This includes not just your wages but also any gifts, inheritances, or support you receive. Failure to report income can result in overpayments, which you’ll have to repay, and even penalties.

You’re required to report income by the 10th of the month following the month in which you received the income. For example, income received in January must be reported by February 10. You can report income by phone, mail, or in person at your local Social Security office. Some individuals may also be eligible to report wages online through the my Social Security portal.

Consequences of Not Reporting Income Accurately

Not reporting income accurately can lead to serious consequences. If the SSA determines that you were overpaid because you failed to report income, you may have to repay the overpayment. In some cases, the SSA can garnish your future SSI benefits to recover the overpaid amount. Additionally, failure to report income can result in penalties, including fines and possible loss of SSI eligibility.

The Role of Resources in SSI

Income isn’t the only factor that can affect your SSI benefits. Resources, or assets, are also considered. To qualify for SSI, you must have limited resources—$2,000 for an individual or $3,000 for a couple. Resources include cash, bank accounts, stocks, bonds, and real estate. However, not all resources are countable. For instance, the home you live in and one vehicle are generally excluded from the resource limit.

If your resources exceed the limit, you won’t be eligible for SSI benefits. Like income, resources must be reported to the SSA, and failure to do so can result in overpayments and penalties.

Strategies for Managing Income and Resources

Given the complexity of SSI rules, managing income and resources effectively is essential to maximizing your benefits. Here are some strategies to consider:

• Plan income carefully: If you have the ability to control when you receive income, consider timing it to minimize the impact on your SSI benefits.
• Use exclusions wisely: Take advantage of all applicable exclusions, such as the earned income exclusion and impairment-related work expenses.
• Consider a PASS plan: If you’re working toward a specific employment goal, a PASS plan can help you set aside income and resources without affecting your SSI.
• Stay informed: SSI rules can change, and it’s important to stay informed about any updates that may affect your benefits.
• Consult with a benefits planner: A benefits planner or attorney who specializes in SSI can help you navigate the rules and develop a strategy to maximize your benefits.

Conclusion: Navigating the Complex World of SSI Income

SSI is a vital program for millions of Americans, but understanding what counts as income and how it affects your benefits is crucial. Whether it’s earned income from a job, unearned income from Social Security, or even non-cash in-kind support, every dollar counts. The key is to understand the rules, plan carefully, and report accurately to ensure that you receive the benefits you need. It’s a complex system, but with the right knowledge and strategies, you can navigate it successfully.