Do Children's Social Security Benefits Have to Be Accounted for Annually?

Social Security payments help cover health insurance and deductible costs.

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The Social Security Administration requires certain representative payees – individuals who manage Social Security payments on behalf of a beneficiary – to file an annual report stating how the funds were used. When a child is the benefit recipient, a parent or legal guardian usually receives the money on her behalf and files the accounting form. The SSA requires this information to help ensure the payments are used responsibly.

Tip

Although certain groups are no longer required to fill out the annual Representative Payee Report, all representative payees must keep accurate records on how the benefits were spent. The Social Security Administration has a right to request these records at any time.

Children's Benefits

Social Security benefits are paid to children based on a parent's earnings record. When the parent is alive and receiving Social Security as a retiree or disabled person, the children's benefit equals 50 percent of the parent's payment. If a parent died at any age after establishing eligibility for Social Security, the child receives a survivor's benefit equal to 75 percent of the amount the parent would have received at full retirement age. These payments attempt to offset the loss of the parent's wages and provide basic needs for the beneficiary.

Spending Benefits

Survivor's benefits for children first need to cover day-to-day requirements, such as water, food and shelter. After basic needs are met, the SSA recommends spending remaining funds on dental and medical expenses for the child. In households with a higher income and assets that prevent the use of subsidized health insurance programs, such as Medicaid or the Children's Health Insurance Program, the money helps cover the cost of a policy or meet the deductible for the child's portion of an existing family plan. If you can pay the child's medical and general living expenses without the monthly benefit, the SSA allows you to use it for clothing, recreation and other miscellaneous expenses.

Saving the Monthly Benefit

If you do not need to use the benefit to support the child in the present, set up an interest-bearing account in his name and list yourself as a fiduciary. The SSA can direct deposit his monthly payments into the savings account, where they will earn interest until he turns 18 and gains access to the money. An alternate savings option recognized by the SSA is the purchase of U.S. Savings Bonds listing the child as the owner.

Detailed Records

If you spend the monthly Social Security payment, keep records detailing the child's expenses. Save utility bill statements, grocery receipts and any other invoices to support your claims. When you save the funds, keep bank statements listing the balance in the savings account and retain the receipts for savings bond purchases. Keep a running worksheet of the benefit amount received and spent to simplify preparation of the annual report, if you are required to fill it out. If not, you should file this information in the event SSA ever asks for it.

Annual Reports

The SSA sends out the accounting report for certain representative payees approximately every 12 months. On this form you list the total of payments received during the year as well as the sum of any benefits you saved in prior years. The form includes a line for reporting the amount of money spent on food and housing and a separate entry blank for all other expenses. If any of the current year's funds were saved, add that amount to the saved amount from prior years, list the new total and indicate how the funds were saved.

Excluded Groups

There are four groups of representative payees that are no longer required to complete the annual report. They include any biological or adoptive parents of a minor child that live in the same house as the child, any legal guardians of a minor child that live in the same house as the child, any biological or adoptive parents of a disabled adult who live in the same house as the disabled adult and any spouse of an adult beneficiary.

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About the Author

Ashley Mott has 12 years of small business management experience and a BSBA in accounting from Columbia. She is a full-time government and public safety reporter for Gannett.


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