Supplemental Security Income

Is it possible to work and receive SSI benefits?

It is difficult to work and maintain your eligibility for Supplemental Security Income. Unlike Social Security Disability where you can work and earn up to $860 gross (before taxes are withheld) per month, SSI only allows you to earn $85 gross (before taxes) each month before Social Security will start withholding from your SSI payment.

After the first $85 you earn in a month Social Security will start withholding $1 from your SSI check for every $2 you earn over the $85 limit. The problem with this reduction is once your SSI benefits are reduced to zero you will not be eligible for Medicaid insurance through your State.

Looking at an example, the maximum you can receive from SSI in most States for 2006 is $603 per month. If you were to work and earn more than $85 at what point would your SSI be reduced to zero? To calculate this amount multiply the amount of SSI you receive in a month by 2 and add $85. For our example above of $603 multiply by 2, $603*2 = $1206. Take this amount and add $85: $1206 + $85 = $1291. If you receive $603 per month and earn $1291 your SSI check will stop and you will lose your Medicaid coverage for that month.

Keep in mind that this $1291 is well above what Social Security considers “Significant Gainful Activity,” and if you are working and earning this amount you could lose your SSI benefits. The amount Social Security considers “Significant Gainful Activity” in 2006 is $860 of pre-tax earnings; if you stay under this amount you can maintain your eligibility for disability benefits. If your SSI is less than $603 and you are working, as long as you stay eligible for $1 of SSI you will keep your Medicaid eligibility.

If you have further questions about how work will affect your SSI benefits a representative from Social Security’s toll-free number can explain this for your particular situation. Remember when calculating the amount you can earn you have to use the actual amount you are currently receiving in your SSI check, as this amount will already have other income you receive factored into it. To speak to a representative about your SSI benefits contact Social Security at 1-800-772-1213.

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If you are like many SSI recipients, you dread seeing a letter from Social Security. The letter arrives in an official looking envelope…you open and sure enough there is another overpayment.

Overpayments on your SSI record arise for a variety of reasons; however, they all have one factor in common: other income. If you receive income from your spouse’s employment, your employment, child support, an insurance settlement, inheritance, or even if you win money won at the casino, this income will most likely create an overpayment with your SSI benefits.

If you are working and receiving SSI benefits, Social Security excludes only $85 of what you earn from the job each month when counting your income. After excluding the first $85 (pre-tax or gross earnings) they will deduct $1 for every $2 you earn over the $85 limit. When you report that you are working to Social Security they will base your monthly SSI payments off an estimate of your work earnings. This estimate is usually higher than what you actually earn to prevent you from being overpaid. You will need to submit copies of your pay stubs to the local Social Security office to ensure that you are being paid correctly.

If you are working and receiving SSI benefits or if your child receives SSI benefits and you or your spouse starts working, you need to notify Social Security as soon as possible. If you don’t call Social Security to let them know, the IRS will notify Social Security of your earnings and you will have a hefty overpayment to deal with. Social Security could even stop your SSI benefits because of your earnings.

This is true for any other income you receive. Insurance settlements, casino or lottery winnings, and family inherences all affect your SSI payment amounts. You might think Social Security won’t know, but they always find out. It’s best to notify them in advance than to receive that nasty overpayment letter later.

When you receive an overpayment letter from Social Security you have 60 days to file an appeal. At the end of the 60 day timeframe Social Security will usually start withholding ten percent of your SSI benefits for the overpayment. If you don’t agree with Social Security’s reason for your overpayment there are two ways to file an appeal. If the overpayment is not your fault you can file for reconsideration on the overpayment. This could be if Social Security made a mistake and paid you too much. If paying your overpayment back would create a financial hardship for you where you would not be able to pay your rent, food, and medical expenses, you can request a waiver. You can even file both reconsideration and waiver requests. To request reconsideration or a waiver call Social Security at the toll-free number below.

If your overpayment was caused by cashing two checks for a given month Social Security generally will not waive the overpayment unless you can prove it wasn’t you that cashed both checks. To prove this you will have to submit signature samples and the Treasury Department will conduct an investigation. Some people who receive SSI cash the check they receive on the first of the month, and then call Social Security to report that they did not receive the check. Social Security is very trusting until you give them a reason not to be; they will send out a replacement check for the one you didn’t receive. If you cash both checks this is called “double check negotiation.” Social Security frowns on this and people who do this can be prosecuted for fraud.

If you receive an overpayment letter from Social Security the best thing to do is call the toll-free number to clarify the reason for the overpayment and how it will affect your check. Social Security is notorious for poorly written letters and a representative should be able to answer your questions and tell you how the overpayment will affect your SSI payments. To speak to a representative, call Social Security at 1-800-772-1213.

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If you receive Supplemental Security Income benefits (SSI) from Social Security because of a disability or your age these benefits are not taxable by the IRS.

SSI benefits are intended to help pay for your food, clothing, and shelter and are not subject to Federal income tax. Because of this Social Security does not report what you receive from SSI to the IRS, or send you a 1099 at the end of the year.

Some assistance programs require a print out of your benefit amounts for the prior year. For these cases Social Security can prepare a special benefit letter for you with the payment amounts you received each month of the previous year. Social Security representatives refer to this document as an “SSI 1099″ even though it is not reported to IRS and you must call Social Security to request one. You can contact Social Security to request this letter at 1-800-772-1213.

Because SSI benefits are not taxable by the IRS, you will not pay State income taxes on this money either.

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