While some individuals who receive Social Security Disability pay taxes on their benefits, some do not. Individuals excluded from this rule are those persons receiving SSI. SSI benefits are non-taxable, thus depleting the need to report them on any tax return. However, if a SSI recipient earned additional monies other than SSI benefits, he or she is required to report those monies earned on the appropriate tax form.

Approximately one-third of all beneficiaries receiving benefits are required to pay taxes on money received. Two factors determine whether an individual will be required to pay taxes on any benefits received. The total amount of money earned (SSDI + additional income) and an individual’s filing status (single, married filing jointly, married filing separately) are those things considered. To determine whether your benefits are taxable, compare the base amount representing with filing status with one-half of your benefits plus any additional income, including tax-exempt interest.

Hypothetical cases incorporating these guidelines are below:

Hypothetical situation # 1

Anne is single and receives SSDI, and over the course of 2009 received $18,000.00 in disability benefits. She received $2,000.00 as additional income in the form of commission from a business that she has. Her combined total income for 2009 is therefore $20,000.00. Since the total amount earned is below the $25,000.00 required for a person-filing single, Anne is not taxed on her disability benefits. *Note: Because Anne’s salary combined was below the set income of $25,000, there was no need to consider one-half of her benefits. The results either way would have been the same.

Hypothetical situation # 2

Daniel, a single 43-year-old male, received $18,000 in disability benefits during the year of 2009. In addition, he earned $18,000.00 as a commercial construction consultant. In this case, to determine whether Daniel would have to pay taxes on his disability benefits, we would need to take one-half of Daniel's disability benefits (1/2 of $18,000 = $9,000.00) and add those monies to any other income that Daniel received in 2009. In this case, he earned an additional $18,000.00. These two totals combined equal $27,000.00, which is $2,000.00 over the $25,000.00 maximum for individuals whom file single. In this case, Daniel’s benefits would be taxed as well as any other income he earned during 2009.

A rule of thumb, if you are in doubt whether you are required to pay taxes on your benefits, consult with a professional tax preparer. Ignorance is not a defense in law.

Post from: Social Security Disability Blog

Paying taxes on Social Security Disability benefits

I received a letter from SSA saying that they are reviewing my current SSDI benefit and possible to end my benefits due to substantial work between 2004 and now.   I would like to have your advisement how I should handle this and what options I can do to keep my SSDI benefits.   I only have Medicare insurance and living with AIDS.   Also, I am deaf.

My response: Social Security is saying that you engaged in "substantial activity" from 2004 to the present.  "Substantial activity" is a term of art and refers to activity that is work or work like activity.   Substantial activity can be work for pay, volunteer work, school or other similar activites.

In a CDR context, Social Security is most likely looking at your earnings record.  As you know, when you work your employer files copies of all W-2's and 1099's generated on behalf of employees.  If you were working and your employer was withholding taxes as the law requires there is a written record of your earnings.

I have posted a table on this blog setting out what you can earn and still fall below SGA (substantial gainful activity).   Social Security will look at your earnings month by month to calculate how many months you exceeded SGA.  You could, in theory, could be asked to repay SSA for each month that you received earnings over SGA and also collected SSDI.

Note that a couple of other concepts apply hear.  After you are deemed disabled, you are eligible for a trial work period of 9 months in which you can earn over SGA but still receive full benefits.  Beyond that, you are placed into an extended period of eligibility (EPE) for disability for an additional 36 months.  While in your EPE, you will be paid for months where you were under SGA and not paid for months over.  So, your overpayment problem will reflect amounts paid to you during your EPE in months when you were over SGA.

If you take the position that you were not actually performing work at SGA level despite payment at or over SGA amounts, you will need to put on evidence to convince a judge that your benefits should not be terminated.  This evidence can include your testimony, testimony from any employer and medical evidence.   For example, if a relative gave you a "job" for the purpose of supporting you and getting a tax deduction and building up your Social Security account, and you were not doing anything of value you might have an argument.

Post from: Social Security Disability Blog

Approved Claimant Returns to Work – Are there any Defenses to a Continuing Disability Review or Termination Action by SSA

Representative payees assume a great deal of responsibility.  They are responsible for handing the claimant's money and for filing periodic reports with the Social Security Administration.   I have seen at least one case in which the rep payee was sued by Social Security because of an overpayment – the claimant went back to work and lost eligibility for benefits but Social Security did not find out for several years.

It has also been my observation that claimants often become angry with their representative payees when the payee refuses to allocate money for an item or service that the claimant deems necessary but the payee does not.   If you are thinking about serving as a representative payee I advise you to research and carefully consider the obligations of this position.

I recently received a question from a prospective payee named Celeste that touches on some of the issues faced by rep payees:

My friend just recently won her disability case, but the judge said she had to have a payee, which is me. I have a few questions that I would like for you to answer for me if you don't mind.

When we went to her appointment at the SS office to get her benefits started we were told that her disability check would be about $365 a month, plus she'd get regular Social Security for about the same amount.  She lives with her brother & his wife & has for quite some time and was hoping to move out on her own. If she did move out and had to take on all the bills herself is it possible that her benefits would go up? I understand her wanting to be on her own, but my fear is that she can't survive on what she's getting right now.

Also, she's getting back money because she's been considered disabled since June 2006. She has loan agreements with some people where she lived with them in the past and social security is paying them back. I understand that, but what I don't understand is her attorney still has to get paid too (25%), but what I'm not sure of is how he'll get paid. Does SS send him a check? Am I supposed to take 25% of the "loan payment" money & pay the attorney? I'm just a little confused about the whole thing. Can you help explain it to me, please?

Here are my thoughts:

1.  What happens when the claimant moves out on her own? It appears from Celeste's email that her friend has been approved for both SSDI and SSI and that her friend is receiving both.  As you may know from reading this blog, SSI payments are set by statute.  For 20o9 an individual can receive a maximum of $674 from SSI.  SSDI is based on a claimant's earnings record.   I am going to assume that the award is for $365 for SSI and around $365 for SSDI, which makes a total of $730.

SSI payments are reduced per a complicated set of rules called the "deeming" rules.  Social Security assigns a "value" for room and board provided by friends or family and reduces SSI accordingly.

If this was an SSI only case and the claimant was receiving only $365 because of the deeming rules, and the claimant then moved out, the SSI could increase to reflect the loss of the room and board.

In this case, however, it appears that the SSI and SSDI together (totaling approx. $730) generate a payment that is higher than the SSI maximum benefit amount.  Thus, from the limited information I am seeing here, I don't know that the claimant would receive any more in her monthly benefit if she moved out and lived on her own.

2. Loan agreements I am not sure what Celeste means when she states that "Social Security" will be repaying the claimant's former landlords.  Agreements to repay can be used to reduce the offsets to SSI but Social Security does not issue checks to anyone.  Also, an agreement to repay does not mean that the claimant has to repay her creditors immediately or at any particular time.   This is one of those areas where the rep payee needs to be very careful because repaying old creditors may not be the best use of the claimant's money.

3. Attorney's fees – most attorneys request direct payment from Social Security and file necessary paperwork so that they will be paid directly from SSA.  Celeste and the claimant should confirm this with the attorney – if there is no direct pay, Celeste should pay the attorney from the lump sum.  The attorney is not entitled to 25% of on-going benefits however.

I would advise Celeste to schedule a meeting with her friend's disability lawyer to discuss these issues.  Obviously my observations are intended to be general as I do not have all of the facts or paperwork in front of me.

Post from: Social Security Disability Blog

What are the Responsibilities of a Representative Payee

–Jonathan

Can you SSDI benefits be seized to pay past due child support?  Yes, according to Social Security Ruling 79-4, the Social Security Administration can withhold a percentage of a claimant's benefits in an amount equal to what SSA could withhold to pay delinquent income tax debt.

No interest or penalties may be withheld, and before the first withholding may commence, SSA must give the claimant 60 days notice.

There is a question in my mind as to whether SSI benefits may be seized to pay delinquent child support.  The web site esocialsecurityappeal.com states that a "custodial parent has no right to any of the proceeds from SSI."    Tim Moore, the editor of DisabilitySecrets.com also states that SSI recipients will not have their monthly disability benefits and past due benefits seize.  According to Mr. Moore, the rationale to protect SSI from levy relates to the nature of SSI as a welfare benefit:  "since SSI is essentially a public welfare benefit and does not derive  not from a claimant's earnings record, SSI benefits cannot be taken for other purposes, just as food stamps and AFDC funds, likewise, cannot be seized."

I have looked at Social Security's official web site, but I cannot find anything directly from Social Security that confirms the disparate treatment between SSDI and SSI.  Mr. Moore and esocialsecurityappeal.com may be entirely correct, but until I am able to find source materials to confirm their assertions I will keep this blog post indefinite.

Auxillary Benefits

You should also note that auxillary benefits paid to dependents of SSDI (not SSI) recipients do not equate to child support.  In other words if a disabled claimant with children is awarded SSDI and those children begin receiving benefits as a dependent of the claimant, those auxillary benefits do not offset the claimant's obligation to pay child support.

Post from: Social Security Disability Blog

Social Security Disability and Child Support

i got an amended date signed by the judge but the  social ser, office only went back to 2005 when i had the hearing  and not the amended date that i was told they would go too. can you help me undersatnd this date stuff.
–Sandra

My reponse: Sandra, for sake of this blog post, I am going to talk mainly about SSDI benefits.  I'll touch on SSI but I'll make SSI date calculations the subject of a later post.

So that everyone is on the same page, when I speak about SSDI, I am talking about Title II disability – the kind of disability that you receive if you have worked and paid money into the system.  In order to qualify for SSDI, you have to be "insured" and have enough credits.  I am going to assume that Sandra has enough credits and that there is no issue regarding her eligibility for SSDI.

When you apply for SSDI, you will be asked about the "onset date" for your disability.  Since you are contending that you no longer have the capacity to work, I usually find that a good onset date is the day that you left your last full time job.   You can voluntarily change your onset date – sometimes I discover that my client chose a date that was many months after he was able to work and I amend the onset date to an earlier date.   In other cases, I find that my client used an onset date that was two or three years before she stopped working – in that case I might recommend that we amend the onset date forward as it is hard to argue that my client is disabled when she was still working full time.

If you are not sure what date you used as your onset date, ask your attorney.  He can usually get a copy of your original application for disability.

My point here is that when you walk into your hearing, you and your lawyer should be in agreement as to the onset date you are trying to prove.

Your judge, of course, is not bound to your choice of an onset date.  I have been involved in many hearings where the judge changes the onset date – usually making it later.  The judge will amend the onset date if he believes that the medical evidence does not support a finding of disability until XYZ date.   Some judges will choose a date that relates to a surgery or a definitive diagnosis.

Sometimes judges will propose an amended onset date based on your age.  If you meet a "grid" rule as of your 50th or 55th birthday, for example, your judge may propose amending the onset to that birthday.

In my experience, judges will raise the onset date issue during the hearing and offer you and your attorney an opportunity to amend the onset date.

The onset date, whether amended or not, represents the date that you meet Social Security's definition of disability.  What does that have to do with payment?  The answer – not much.

Payment issues and onset issues are completely different concepts.  For payment purposes:

1. the first five full months after onset are not payable by SSDI – this is called the "5 month waiting period."

2. you can get paid up to 12 months prior to your date of application

Examples:

1.  Tom applied for benefits on 3/5/2007, alleging an onset date of 3/3/2007.  He was approved.  His first check will be for September, 2007.   Why?  He does not get paid for the partial month of March, 2007, plus the next five full months – April through August, 2007.

2. Sally applied for benefits on 2/7/06, alleging an onset date of 4/10/05.   She was approved.  Her first check will be for October, 2005.  Why?   She does not get paid for the partial month of April, 2005, plus the next five full months – May through September, 2005.  If Sally is eligible for SSI, she collect SSI for April, 2005 through September, 2005.  There is no 5 month waiting period for SSI benefits.

3. Ralph applied for benefits on 6/15/07, alleging an onset date of 3/17/03.  He was approved.  His first check will be for July, 2006.  Why?  He is eligible to receive benefits up to 12 months prior to filing.  The five month waiting period ran in 2003, before he was eligible for payment.

Post from: Social Security Disability Blog

Am I Getting the Right Amount of Money – Understanding Social Security's Date Calculations

–Jamie

Jonathan Ginsberg responds: If you are eligible for Title II benefits, then your dependents would be eligible for auxiliary benefits. As you may know, SSA looks at the ten years prior to the onset of your disability to determine eligibility. If you have at least 20 covered quarters during this ten year period, you would be eligible. I have written more about the earnings requirements for Title II here.

You describe "moving to part time work," but you do not say how long that process took or how it impacted your earnings. What you need to find out here is something called your "date last insured" for Title II. Sometimes you can get this information directly from Social Security by phone, or you can request it in writing using a Form 7004 – Request for Statement of Earnings & Benefits, which you can download at my law firm web site.

If you can show SSA that the onset date for your disability is before your date last insured, you are in good shape for Title II.

My concern here has to do with part time work. As I have noted before on this blog, part time work tends to muddy the water when it comes to disability. SSA often sees things in black and white, and some fact finders (adjudicators or judges) take the position that if you can work part time, you could also work full time at a less demanding job.

On the other hand, the medical problems you describe seem serious enough that you ought to be approved for benefits. Hopefully, you will not have any problems qualifying for Title II as your husband's income would eliminate your eligibility for Title XVI SSI.

Post from: Social Security Disability Blog

Disability Applicant Asks About Auxiliary Benefits for Her Children

–Christine

Jonathan Ginsberg replies: Christine, unfortunately, I have heard of this type of situation. The law is very clear: except in very limited situations (child support debt, some tax debts) a judgment creditor cannot seize your Social Security money.

You should do two things immediately. First, contact your branch manager and express your extreme displeasure that the bank honored a garnishment against your Social Security account when they clearly know that these accounts are excempt from garnishment.

Second, you should write a strongly worded letter to the judgment creditor and their lawyer advising them that they need to return your funds within five (5) days or else you will pursue all civil and criminal remedies against them.

If you can find a lawyer in your area who handles Fair Debt Collection Procedures Act cases, I would call him/her.

You may also want to call your local Social Security office and/or your elected representative for some assistance.

Please let me know what happens.

Post from: Social Security Disability Blog

Can a Judgment Creditor Garnish the Checking Account Where My Social Security Direct Deposit Goes?