Why Would Social Security Tax Children’s Benefits?

12.2.19Benefits for Social Security survivor children’s benefits are generally made out to a parent or guardian. They are taxable income, but most children do not have enough income to owe taxes on the benefits.

According to a recent article “Are Social Security survivor benefits for children considered taxable income?” from Investopedia, the only way the benefits would be taxed if half of the child's benefits in a year, plus other income earned by the child in that year, reached the level that required a tax return to be filed and for taxes to be paid.

If half of the annual benefits plus the child's other income is greater than a base amount set by the IRS, then a portion of the benefits is taxable.

It’s common for checks for Social Security survivor benefits to be made out to an adult, such as a parent or guardian, on the child's behalf.

However, the amount of the benefits doesn’t impact the income tax of the parent.

If both the parent and the child receive benefits, the amount designated for the eligible child is deducted from the check to calculate the parent's tax liability.

The child getting the benefits may still be considered a dependent for tax purposes, if he or she lives with the parent for more than half the year, and the parent pays for more than half of his or her living expenses, such as food, housing, clothing, education, and medical care.

Remember that Social Security benefits are reported to the IRS.

Every January, individuals receiving Social Security benefits is sent an SSA-1099 form. The statement includes information on all benefits that were received during the prior year. These are used to calculate any tax liability.

Reference: Investopedia (January 31, 2018) “Are Social Security survivor benefits for children considered taxable income?”

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