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- Do Montana Residents Pay State Income Tax on Social Security Benefits?
- How to Report Social Security Child's Insurance Benefits on Income Taxes
- Do I Pay State Taxes on Social Security Benefits?
- Do You Need to File Taxes If You Receive Social Security Disability Benefits?
The type of Social Security benefits children receive when their parents are deceased is called survivors benefits. In 2011, more than 4.3 million children received some form of Social Security benefits, including survivors benefits. Survivors benefits are paid out on a tax-free basis. However, if children have work earnings or other taxable income, their total income could cause their benefits to become taxable.
Children are eligible for Social Security survivors benefits if either of their parents met qualifications for Social Security benefits before passing away. The children must also meet certain eligibility requirements. Survivors payments are made to children who are unmarried, under 16 years old, or up to age 18 or 19 if they're still in high school. Children with qualifying disabilities that started before reaching 22 years of age receive survivors payments for the rest of their lives as long as they remain disabled. The Social Security Administration pays benefits to the deceased parents’ qualifying natural children, adopted children, stepchildren, grandchildren and step-grandchildren.
Children receive monthly checks amounting to 75 percent of their deceased parents’ entitled Social Security benefit amount every month they're eligible. They may also receive a special one-time lump-sum death benefit of $255. Their survivors payments are decreased, however, if they’re working or the total benefits paid to them and other family members exceed 150 to 180 percent of their deceased parents’ benefit amount.
Survivors payments are taxed based on the total combined income of the children who receive them. This can include work wages, self-employment earnings, and dividends from stocks or life insurance policies. If their total incomes exceed $25,000, up to 50 percent of their survivors benefits are taxed at normal income tax rates. Up to 85 percent of their survivors benefits are taxed if their combined incomes top $34,000.
There are two ways for income taxes to be paid from childrens' Social Security survivors benefits. Estimated quarterly payments can be made to the Internal Revenue Service. Another option is to ask the Social Security Administration to withhold between 7 to 25 percent from survivors payments each month to pay taxes.
- Social Security Administration: Congressional Statistics, December 2011
- Social Security Administration: Survivors Planner: If You're The Worker's Minor Or Disabled Child
- Social Security Administration: Survivors Planner: How Much Would Your Benefit Be?
- Social Security Administration: Survivors Planner: A Special Lump Sum Death Benefit
- Social Security Administration: Benefits Planner: Income Taxes And Your Social Security Benefits
- Social Security Administration: Benefits Planner: Withholding Income Tax From Your Social Security Benefits
- children image by Mat Hayward from Fotolia.com