Can a Tax Refund Affect SSI Eligibility?

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Question:

I think I may get a tax refund this year because I had to quit working last year due to my disability. Is this going to cause my SSI payments to stop?

Answer:

Supplemental Security Income (SSI) provides monthly cash assistance to needy persons who are disabled, blind, or elderly. In order to meet the financial requirements of the program, an individual must be low-income and have few assets. The Social Security Administration assesses your financial eligibility in each month to see if you still qualify. Your tax refund is not likely to cause you to lose benefits, but the rules are a bit complicated.

SSI Resource Limit and Tax Refunds

Under SSI rules, your resources are determined as of the first moment of the first day of each month. You cannot have "countable resources" worth more than $2,000 (for couples, the limit is $3,000) in any month. Resources that the Social Security Administration counts can be cash in the bank or items of personal property, except for those that fall under an exemption.

Social Security exempts your residence, one vehicle, certain household goods, burial plots, and life insurance policies worth up to $1,500. Federal and state tax refunds and advanced tax credits (such as premium supports for health insurance) are also exempt from being counted toward the resource limit, but only for twelve months. If you haven't spent the tax refund within 12 months, and you have over the amount of allowable resources, you could lose your benefits. Similarly, payments from the earned income tax credit and child tax credit are exempt for nine months from the date of receipt.

SSI Income Limit and Tax Refunds

In 2019, the income limit for SSI is $771 per month for individuals and $1,157 for couples. But as with resources, not all income is considered "countable." The first $65 per month of earnings, and one-half of wages over that amount, are exempt from the income limit. Certain other exemptions and state supplements to SSI can affect the income limit as well. Federal and state tax refunds and advanced tax credits are not considered countable income for SSI purposes. So the only thing you need to worry about is the resource limit, after 12 months.