What is SSI?
SSI, is a federal benefit plan operated by the Social Security Administration that provides financial safety-net assistance to needy people. If you are 65 or older, blind or with special needs, you are a U.S. citizen or legal resident, and you have minimal income and financial capacity, you can apply for monthly SSI benefits.
The SSI Limited Income Standard in 2020, is income up to $803 a month for an adult, or $1,195 a month for a couple.
SSI Ineligibility With An Inheritance
To obtain their benefits, the SSI recipients must comply with very strict income and asset regulations. Among the most fundamental rules is that a sole SSI beneficiary may not have calculable resources of more than $2,000. The SSI program relies on financial need. Any earned or unearned income will affect your benefits.
Therefore, if an SSI recipient knows he or she is going to receive an inheritance, the first response might be to reject it.
But this denial often referred to as disclaimer, may not be the best approach.
To receive benefits, SSI beneficiaries have to deal with very strict rules on income and assets. If the beneficiary had disclaimed the inheritance, not only would she lose her SSI income, but she would also not gain from her inheritance.
Eligibility For SSI With An Inheritance
The recipient of SSI has no need to neglect the unforeseen inheritance. There are options that depend on the circumstances of the person. A disabled beneficiary under the age of 65 will accept the inheritance and then transfer the funds to a trust with special needs or a pooled trust without affecting their monthly benefits.
Once the trust retains the money, the beneficiary will be able to continue receiving SSI compensation, and the trust funds may be used to support him or her.
In an alternative scenario, the beneficiary may choose to transfer/give the funds to a family member depending on the circumstances, and lose his or her benefits until the time of ineligibility ends.
Avoiding SSI Fraud
If the Social Security Administration (SSA) learns that you knowingly lied or misrepresented any information related to your application or eligibility for SSI benefits, you may face criminal prosecution for fraud. Do not misrepresent or withhold information while engaging with social security, or you may be prosecuted for fraud.
You must never try to disguise the fact that you are working or falsifying the number of hours you are working.
When you receive disability benefits you are required to report your earnings to SSA
The IRS taxes almost every income source. Chapter 26 U.S. Section 61 of the Code describes gross taxable income as all income obtained from whatever source and that encompasses a whole lot of ground.
The Code provides many sources of income as examples, but Supplemental Security Income (SSI) does not appear anywhere on the list— and SSI is not taxable because it is based on need and a disability benefit.
If the inheritance generates income or the inheritance is income itself, you will have to pay income taxes on that amount.
If you collect an inheritance or your loved one, do not give it up immediately with the fear of losing SSI benefits. Before making these decisions, you can consult with an experienced Finity Law firm attorney to help you handle your situation better, without compromising your resources and benefits.