While the typical image of a Social Security recipient is a senior citizen, the program actually pays benefits to a lot of children -- approximately 4.4 million as of August 2012 -- who have a retired, deceased or disabled parent. The payments help caregivers provide a child with basic necessities and, when possible, additional comforts. To verify the responsible use of funds, caregivers file an annual expense report with the Social Security Administration (SSA).
Qualifying for Benefits
An unmarried child of a disabled or retired person eligible for Social Security may receive benefits based on her parent's record, even if the parent is still alive. When a parent with a sufficient work record dies, a surviving child receives payments until age 18 or, if he is still enrolled in secondary school, age 19. For children with a disability diagnosed prior to age 22, survivor's benefits continue through adulthood. Survivor's benefits based on a deceased parent's record equal 75 percent of the parent's primary insurance amount -- the Social Security payment the parent would have been entitled to at full retirement age -- while children receiving payments on a disabled or retired parent's record get 50 percent.
Immediate Uses for Funds
When a child receives benefits from Social Security while still under the age of 18, the SSA sends the funds to a representative payee, usually a parent or legal guardian. The payments are intended to help support the child since the disabled or deceased parent is no longer able to contribute. You can deduct regular home expenses, like the child's portion of rent or a utility bill, and living expenses, such as groceries, clothing and toiletries for her, from the payment. After necessities are paid, use the remaining funds to meet any deductibles on health and dental insurance policies for the child. If you feel your household budget can cover routine expenses without difficulty, consider using the funds for school tuition, music lessons, dance classes or other educational opportunities.
When you choose to support a child's immediate needs without using the survivor's benefits, Social Security still allows you to receive the payments as a financial agent of the child if you place them in a savings account with him listed as the owner or purchase savings bond in the child's name. When he reaches the age of 18, the funds become available for immediate or future use. All benefits sent after he turns 18 are paid directly to the child.
Since survivor's benefits are meant to support the current and future needs of a child, the SSA requires the representative payee to file an annual accounting report. The SSA sends out a annual form that requires you to list the sum of payments received and how they were used. Funds spent on food and housing are one expense group while an additional category covers all other expenses. You may mail the report back to the SSA or submit it online by using the verification information and instructions printed on the paper version. Keep any financial worksheets, receipts and invoices that verify the totals reported on the form in case the SSA requests additional information regarding your expenditures.
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