Disabled children in a low-income family might receive Supplemental Security Income, or SSI from the Social Security Administration. SSI is designed to help families pay for the care of a disabled child. Depending on the child's age, the money is typically issued to the caregiver of the child and not the child himself. Whether the SSI payments are considered income depends on the company or organization looking into the family's finances.
Internal Revenue Service
A family's income determines whether a child qualifies for SSI. While the funding for Social Security benefits comes from Federal Insurance Contributions Act (FICA) taxes the U.S. Treasury pays for SSI benefits with funds collected from individual and corporate income taxes. Because SSI payments are not taxed, you won't receive a Form SSA-1099 at the end of the year and you don't have to include the income in your tax return.
Some states offer additional SSI payments to a child who qualifies for federal benefits. In addition, these states offer medical assistance, or Medicaid, to pay for medical expenses, and Supplemental Nutrition Assistance Programs -- previously known as food stamps -- to help pay for food. Although SNAP and Medicaid are federal government programs, both are run by state governments. When you apply for either of these benefits, the state or local agency won't include your child's SSI payments in your income when determining your eligibility.
The Free Application for Federal Student Aid -- or FAFSA -- must be completed by all college-bound students seeking financial assistance. The amount of assistance for which the student qualifies is based on the size and income of the student's family. The government doesn't count SSI payments in a family's income when calculating whether the student is eligible for financial aid.
When applying for a loan or mortgage, lenders want to know the details of all income received by members of the household. If the family seeking the loan includes a child who receives SSI, that money can be counted as income, and doing so can improve the applicants' debt-to-income ratio.
- Social Security Administration: Tax Requirements for SSI Benefits
- Internal Revenue Service: Publication 507 -- SSI Payments
- Social Security Administration: Supplemental Security Income (SSI) Overview
- Social Security Administration: Supplemental Nutritional Assistance Program Facts (SNAP)
- Financial Aid.org: Financial Aid for Students With Disabilities
- FHA.com: Important Changes to FHA Loan Rules for Income Verification
- Goodshoot/Goodshoot/Getty Images
- What Happens After the IRS Accepts My Return?
- How Do I Rectify an Error Found on My Taxes?
- FHA Guidelines for Employment Gaps
- What Documents Are Needed to Prove to the IRS That a Child Is Yours?
- How to Report Farming or Share Crop Income Loss on Personal Income Tax
- The Advantages of Living in a Gated Community
- Can I Take a Deduction for Pretax Health Dollars?
- What Is the FICA-HI Tax?
- Can I Claim an Individual With Disabilities?
- Can a Husband and Wife Both Claim Flexible Dependent Care Benefits?