A Quick Primer on the Taxation of Social Security Disability Insurance (SSDI) Benefits
SSDI payments, like old-age Social Security retirement benefits, can be taxed, depending on the SSDI beneficiary?s other inco...Read more
The rules for how income will reduce a Supplemental Security Income (SSI) beneficiary's monthly benefit can be very confusing. Here is a quick look at how the Social Security Administration (SSA) treats an SSI beneficiary's income.
In general, every dollar of unearned income (such as interest or dividends) received by an SSI beneficiary reduces his SSI benefit by one dollar, and every dollar of earned income (such as wages) reduces his benefit by 50 cents. If these reductions bring the SSI benefit down to zero, then the beneficiary loses SSI and in many cases the Medicaid benefits that come with it.
But before applying these rules, all SSI beneficiaries are allowed to disregard their first $20 of monthly income from any source. In addition to this initial deduction, beneficiaries who are working can ignore their next $65 of earned income.
In addition to these helpful income disregards, a beneficiary who is working may deduct from her monthly earned income figure any impairment-related work expenses like specialized transportation costs and durable medical equipment required for her job. It does not matter if the beneficiary also needs those services or supplies to help her outside of work as well. These expenses are deducted from income on a dollar-for-dollar basis.
For example, if an SSI beneficiary makes $1,000 a month at work and needs to pay $200 a month for a special van to transport him to his job, that beneficiary will have his SSI benefit reduced by $357.50 ($1,000 - $20 income disregard - $65 earned income disregard - $200 impairment-related work expenses = $715 / 2 = $357.50).
Because these income rules can be difficult to implement -- even the SSA doesn't get them right all the time -- it's important to discuss all of your sources of income with your special needs planner prior to applying for SSI. Every dollar counts!