Thank you for your reply! I did some further research and found the tax guide that is published annually by a lawyer and the former long-time head of our local chapter of The Arc (a special needs advocacy organization). This is what the guide states regarding this issue:
"NON-TAXABILITY OF SUPPLEMENTAL SECURITY INCOME (SSI)
SSI is not taxable for the person receiving the benefit. If the SSI recipient in Michigan is receiving a combined federal and state benefit at the Sharing/Independent level (a total of $957.00 for 2024; $981.00 for 2025) and is paying his/her “pro-rata share” of the household expenses, then that share is not taxable income to the householder who receives the money. This is true whether the householder is a parent or other relative or an unrelated person. The share is not taxable income because it is merely a reimbursement to the householder for that portion of expenses attributed to the SSI recipient. This situation may be more easily understood by likening it to the situation where four college students share an apartment. Each student is responsible for one-fourth of the household’s expenses and no one’s individual share is considered as income to anyone else.
In a different set of circumstances, if the SSI recipient is paying either “rent” or “room and board” to his/her parents (or anyone else for that matter), then those “rent” or “room” payments (minus expenses incurred) are considered income to the parent (or another landlord).”
We believe that we meet the criteria in the first set of circumstances. However, it appears that the only difference between the two circumstances is what the money is referred to as (“share” versus “rent” or “room and board”). If that’s the case, who makes that determination? During the initial interview for SSI, they ask whether you’re charging your child rent or not and if so, how much. That amount is on record with them and is referred to on our child’s SSI document as “rent". Can we choose to refer to it as her “pro-rata share” of household expenses for tax purposes even though the SSA refers to it as “rent” on the SSI document? Also, we don’t know whether this matters, but in addition to the amount listed on that document as “rent” (which is the amount we came up with as her fair share for housing toward our mortgage payment), we have her pay an additional amount toward her share of the utilities.
