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Question: How Do I Handle Derivative Social Security Benefits?
Answer: There are two categories of Social Security benefits received by children.
1. Social Security payments based on the parent's status. The parent must be disabled (the usual case); or retired and entitled to Social Security; or a parent who died after working long enough at a job where he paid Social Security taxes. The child must also be unmarried, 17 years old or younger, 18 or 19 if still a full-time high school student, or older than 18 if she has a disability that began before the age of 22.
For child support guideline purposes, these payments may or may not be included in income. Check your guideline statute. In Connecticut, for example, these payments are included in income for child support purposes.
If you want to show them as being counted for guideline purposes, they should be entered on the Income > Wage-like screen. in some states, there will be specific entries for derivative Social Security benefits. If you do not see a specific entry, enter them on a write-in line, and marked as nontaxable. This is because in any event derivative Social Security benefits are not taxable to the parent.
For tax purposes, these are included in the income of the child, not the parent. Relatively few children have enough other income that this income becomes taxable.
If you do *not* want the derivative Social Security payments to be counted for guideline purposes, the amount should be entered into the software on the Income > Wage-like screen as "Public assistance," which is not taxable and not included as income for child support purposes.
Either way, this entry will carry to the state's financial affidavit.
The state of Connecticut has a special adjustment for these payments. For Connecticut child support guideline purposes, the amount should be entered on Children > Social Security, in the column of the non-custodial parent, but only if the non-custodial parent is the one injured or retired and it is the custodial parent who receives the payment. In this case, this amount will reduce the child support payment on a dollar-for-dollar basis.
2. SSI payments. A child can receive payments in his own right from the Social Security administration
In order for a child to qualify for SSI payments, the child must be from a family with low income and limited resources. The child must also have a physical or mental condition resulting in "marked and severe functional limitations." These conditions must last at least 12 months or eventually lead to death. SSI is not taxable.
SSI income typically is NOT included in income for child support purposes.
As such, it should be entered into the software on the Income > Wage-Like Income screen as "Public assistance," which is not taxable and not included as income for child support purposes.
This entry will also carry to the state's financial affidavit.