With most mineral rights leases, the property owner is entitled to royalties based on the value of the minerals mined. For most, the news that they may be able to make a profit from the oil, gas or other minerals under their property without actually selling their home is good news. If you collect Social Security benefits, however, it's important to consider the effect royalty payments may have on your eligibility and benefit amounts.
In most cases, the Social Security Administration considers income received from mineral rights "unearned income." Collecting royalties will not affect your disability status like working at a job does. Because of this, SSDI and Social Security retirement benefits will not be affected by mineral royalties as long as you don't incorporate as a business. Supplemental Security Income (SSI) benefits, however, are designed to supplement the incomes of retirees and disabled persons with very limited financial resources and income. All but the smallest royalties can affect your SSI benefits.
Effects on SSI
When you receive more than $60 per quarter from unearned income such as mineral royalties, your SSI benefit will be adjusted. In most cases, the excess royalties will be subtracted, along with all of your other earned and unearned income, from the current federal benefit rate. If your income -- including your royalties - exceeds the federal benefit rate, you will be ineligible for SSI for that month. Depending on where you live, your state supplemental benefits could be affected similarly.
Native American Exemptions
If you are a member of certain Native American tribes, the Social Security Administration will not count your mineral royalties when determining your eligibility or benefit amount for SSI. Exempt tribes are those under agreements through which the U.S. government purchased and administers tribal lands. Check with your tribal officials or the Social Security Administration to see if your tribe is exempt.
Selling Your Mineral Rights
You may have the option to sell your mineral rights rather than leasing them. If you do, you will lose future royalties. You will retain rights to the surface property and buildings on it, but the rights to and profits from all minerals below the surface will belong to whomever you sell them to. In most cases, the sale of property is considered a transfer of resources rather than a gain in resources. Selling your mineral rights will not in and of itself affect your eligibility for SSI. It may affect your eligibility, however, if it puts you over the current resource limits.
- Social Security: SSR 79-28: Title XVI: Exclusions From Imcome and Resources of Receipts from Lands Held in Trust for Certain Indian Tribes
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