Receiving an inheritance annuity doesn’t affect all types of Social Security payments, but it can affect some some Social Security benefits depending on the amount of your inheritance annuity and any other assets you own. An inheritance annuity can also affect the taxation of your Social Security payments.
What Social Security Payments Are Not Affected By an Inheritance Annuity
Several types of Social Security payments are not affected if you’re receiving an annuity. If you’re receiving payments from Social Security Disability, Retirement and Survivors, the benefit amounts remain unchanged no matter how much your inheritance is. Your monthly benefits from these programs are only affected if you have income from working.
What Social Security Payments Are Affected
An inheritance annuity does affect your Supplemental Security Income (SSI) payments. In fact, the amount of your annuity can cause you to be ineligible for SSI -- a needs-based program that pays monthly benefits to low-income individuals and families who meet the Social Security Administration’s eligibility requirements. One of the requirements is having assets, such as an inheritance annuity, valued at or below the guidelines set by the benefit program. As of 2012, you cannot receive SSI payments if your assets are worth more than $2,000 -- or $3,000 if you’re married.
How It Affects Taxation of My Social Security Payments If I’m Single
The amount of your inheritance annuity can cause your Social Security payments to become taxable. This depends on your combined income, which includes your Social Security benefits and any taxable income such as work earnings, dividends or inheritance annuities. If you’re unmarried filing taxes, 50 percent of your Social Security payments are taxed at normal tax rates if your combined income exceeds $25,000. Up to 85 percent of your Social Security payments are taxed if your combined income tops $34,000.
The Effects on Married People
If you are married and either you or your spouse receives an inheritance annuity, your Social Security benefits are taxed at normal income rates if your combined incomes surpass income limits. If your combined household incomes top $32,000, up to 50 percent of your Social Security benefits are taxed and up to 85 percent if your incomes exceed $44,000.
- money image by cherie from Fotolia.com