Are Social Security Survivor Benefits for Children Considered Taxable Income?

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Are Social Security Survivor Benefits for Children Considered Taxable Income?

Even though the checks are made out to a parent or guardian, Social Security survivor payments for children are considered taxable income solely for the children who are entitled to them. Most youngsters do not earn enough money in a year to owing taxes.

Key Takeaways

  • Social Security survivor payments granted to children are taxable, however most children do not earn enough to be taxed.
  • If the child’s sole taxable income is survivor benefits, they are not taxable.
  • If the child’s benefits and other income exceed $25,000, the benefits are taxed.
  • Parents or guardians who receive benefits on behalf of their children are not taxed.

Survivor benefits, on the other hand, are taxed if half of the kid’s benefits in a year (combined to any additional income the child obtains in the year) is enough to necessitate filing a tax return and paying taxes. If half of the yearly benefits plus the child’s additional income exceeds an IRS-determined base level ($25,000 in 2020), a part of the benefits are taxed.

Social Security Benefits for Children

Children who have a dead parent and are under the age of 18 or 19 if they are enrolled full-time in elementary or secondary school are eligible for social security payments. Other children, such as stepchildren, grandkids, or adopted children, may be eligible as well. Children may obtain benefits at any age if they were handicapped before the age of 22 and continue to be disabled. Children might get up to 75% of the benefit of a dead parent.

  Tax-Free Definition

Social security payouts for children are never taxed for the parent or guardian.

Parents Receiving Checks on Behalf of Children

The majority of Social Security survivor benefits cheques are made out to an adult, such as a parent, on behalf of the child. The amount of the benefits has no effect on the parent’s income tax. If both the parent and the kid are eligible for benefits, the amount assigned for the eligible child is deducted from the check to calculate the parent’s tax due. Dividend and investment income are the two types of income that a kid may claim.

If the kid receiving the benefits lives with the parent for more than half the year and the parent pays for more than half of their living expenditures, such as food, housing, clothing, education, and medical care, the child may still be deemed a dependant for tax reasons. In addition, if the kid is obligated to file a return owing to Social Security payments, parents or guardians are responsible for submitting and signing the return on the child’s behalf.

The IRS receives information on Social Security payouts. In January, the benefit recipient gets an SSA-1099 form with the total amount of benefits received during the previous year. Again, the IRS does not consider Social Security payments for children to be income for the parent or beneficiary who gets the money on the child’s behalf.

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