SSA 1099 Survivor benefits

[scashman]

I am confused. My widowed daughter and her 8 yr old daughter (from that marriage) are living with her fiance for the last two years. They both receive $7700 each year for survivor benefits. I do their taxes and list him as head of household. Daughter does not work. I did not include my daughter as his dependent last year because I thought the survivor benefits were not taxable. Her 8 yr old is included as his dependent (along with two other children in the home) but I also did not list her (8 yr old)  $7700, again I was not thinking it was taxable. If I include my daughter on his taxes as a dependent she has to pay taxes on the SSA. If I do her own individual taxes she will not have to pay anything. I am not certain what to do with the SSA 1099's for them. Last year I ignored them. Maybe that wasn't the right thing to do.

[Cynthiad66]

It depends on whether your daughter had any other taxable income.  If all she received was the $7,700 in survivor's benefits then it is not taxable and no return is required.

Social Security survivor benefits for children are considered taxable income only for the children who are entitled to receive them, even if the checks are made out to a parent or guardian. Most children do not make enough in a year to owe any taxes. 

Yes he  can claim a boyfriend or girlfriend as a dependent on his federal income taxes if that person meets the IRS definition of a "qualifying relative

A qualifying relative is a member of your family or a friend who is designated by the IRS as a tax dependent. This means that a taxpayer must provide financial support for that relative or friend during most of the year.  So provided he provides more than half of their total lsupport, he can claim the dependents

[scashman]

Thank you so much for your thorough response. That was exactly what I needed to know.