If you're lending a financial hand to your parents, your well-intentioned efforts may have consequences for their Social Security benefits. Although Social Security disability and retirement benefits are not "means tested," Supplemental Security Income does take into account support received from outside sources, including children and other relatives. This will probably come into play if you're providing enough support for your parents to qualify as dependents.
If you claim your parent as a dependent, this alone does not change your parent's retirement benefits, but it can impact disability benefits. There are income limits to be aware of for SS disability and SSI benefits programs, and your parent's other income might also cause him or her to no longer qualify as a dependent.
Qualifying as a Dependent
You can claim a parent as a dependent if you provided at least half of his support during the year. This support may come in the form of food, housing, medical expenses, clothing and other essentials. The parent's income may not exceed $4,150 as of 2018; this amount does not include any Social Security or Supplemental Security Income benefits he is receiving. To claim a parent or anyone else as a dependent, he may not be eligible as a dependent on someone else's tax return.
Qualifying for Retirement Benefits
Social Security retirement benefits are based on work history and how much the beneficiary paid into the system. If your parent worked, paid in through payroll taxes, and earned at least 40 work credits through payroll withholding or self-employment taxes, she's eligible for retirement benefits. However, if she was born before 1929, she would need less than 40 credits to be eligible.
Your claiming her as a dependent has no effect on the benefit amount. She's also free to work and receive other income while collecting retirement, although if that extra income exceeds $4,150, she can't be your dependent.
Qualifying for Disability Benefits
To qualify for Social Security disability, your parent must prove that he is unable to work due to a medical condition that has lasted, or is expected to last, at least 12 months. The benefit is based on his work record and is paid monthly until he reaches full retirement age or until Social Security decides he is no longer disabled. Being claimed as a dependent has no effect on the benefit, but Social Security does limit any wage income she receives while on disability.
Receiving Supplemental Security Income
The SSI program provides benefits to disabled people who don't qualify for regular disability benefits. The benefit amount is a flat $771 a month as of 2019, but SSI is a means-tested program. Your parent's resources are limited to $2,000 if she's single, and $3,000 if she's married.
In addition, Social Security also limits her monthly earned and unearned income. If she's receiving free lodging from a relative, for example, the agency will count the market value of that housing as income and offset her benefit accordingly. If you are claiming her as a dependent and thus providing at least half of her support, she may exceed the income guidelines for SSI.
Founder/president of the innovative reference publisher The Archive LLC, Tom Streissguth has been a self-employed business owner, independent bookseller and freelance author in the school/library market. Holding a bachelor's degree from Yale, Streissguth has published more than 100 works of history, biography, current affairs and geography for young readers.