Effect off claiming a SSI beneficiary on their benefit?

[Malcolm Pipes]

I have a friend living with me that is 100% disabled and receiving SSI benefits.  She is convinced that claiming her as a dependent for income tax purposes will adversely impact her SSI benefit amount.  She qualifies as a dependent under the tax code and Social Security rules.  I have tried to explain to her that as a legal dependent under the tax code, SSI will not reduce her benefits for living expenses (e.g., rent/mortgage, utilities, and food).  On the other hand, as I have tried to explain, if she does not appear on my tax returns as a beneficiary, then SSI can access the value of those living expenses as in-kind payments and reduce her benefits accordingly.  Am I correct?  Will her SSI benefit be reduced if she is claimed as a dependent?  If she is not a dependent on my taxes, can she be accessed the value of her living expenses as in-kind payments charged against her SSI? 

[tagteam]

@Critter-3 

[Critter-3 · Accepted solution]

First you have 2 situations to consider here ... (1) are they a qualified dependent for income tax purposes and (2) does that rise to the facts to reduce their SSI benefits.  Being able to claim them as a dependent on a return should  not affect their benefits if they are honest with the agency and properly reporting things as required.  Changes in living situations should be reported ... failing to do so may be considered committing fraud and could have the benefits reduced or removed.  Read the info in the link below. 

The tests for a qualifying relative are:

• Qualifying Child: They are not the “qualifying child” of another taxpayer or your “qualifying child.”
• Gross Income: The dependent being claimed earns less than $4,400 in 2022.
• Total Support: You provide more than half of the total support for the year.
• Member of Household or Relationship: The person (a friend, girlfriend, non-blood relative) must live with you all year as a member of your household or be related to you.

TurboTax software will ask you simple questions and give you the tax deductions and credits for which you are eligible based upon your answers.

See also these TurboTax Helps.

Who Can I Claim as a Tax Dependent?

Can I claim my relative or friend as my dependent?

You may also want to view IRS Publication 501.

Dependents, Standard Deduction, and Filing Information

What can reduce SSI benefits?

In-kind support and maintenance is food, shelter, or both that somebody else provides for you. We count in-kind support and maintenance as income when we figure the amount of your SSI. For example, if someone helps pay for your rent, mortgage, food, or utilities, we reduce the amount of your SSI.

Read up on the rules here: https://www.ssa.gov/ssi/text-living-ussi.htm#:~:text=In%2Dkind%20support%20and%20maintenance%20is%20....

WHAT IS IN-KIND SUPPORT AND MAINTENANCE?

In-kind support and maintenance is food, shelter, or both that somebody else provides for you.  We count in-kind support and maintenance as income when we figure the amount of your SSI.  For example, if someone helps pay for your rent, mortgage, food, or utilities, we reduce the amount of your SSI. Receiving in-kind support and maintenance can reduce your monthly SSI payments as much as $324.66, depending on the value of the help you receive. 

We do not count in-kind support and maintenance if you:

>live alone and pay for your own food and shelter;

>live only with your spouse and minor children and nobody outside the household pays for your food and shelter; or

>live with other people and pay your share of the food and shelter expenses.

 

HOW DOES MY LIVING ARRANGEMENT AFFECT MY SSI BENEFIT AMOUNT?

Your living arrangement is where you live, if you live alone or with someone else, or if you live in an institution, such as a nursing home. Your living arrangement also depends on who pays for your food and shelter. Whether you live alone or with someone else, we need to know who pays for your food, shelter, and utilities. Here are some examples of common living arrangement situations.

[xmasbaby0]

@Malcolm Pipes Another thing for you to keep in mind when you entertain the prospect of claiming the friend who lives with you is that all you "get" for claiming a non-relative adult dependent on your tax return is a non-refundable $500 credit for other dependents.  Consider whether it is worth it to stress your friend over this.

https://ttlc.intuit.com/questions/4499708-what-is-the-500-credit-for-other-dependents-family-tax-cre...