When the parent of a minor child pays into the Social Security system and then retires or dies, the child is often entitled to Social Security benefits under the parent's work record. If your child receives these benefits, a portion of them may be taxable. However, your child's Social Security benefits do not count as your income.
A minor child's Social Security benefits are never treated as the parent's income, and therefore, will never affect the parent's tax responsibilities.
Taxability of Benefits
If a minor child receives only Social Security survivors' or disability benefits and other unearned income, he must file a return if the total of his unearned income exceeds $1,050. If the child is blind, the Internal Revenue Service won't require him to file a return unless the total exceeds $2,650. If the child also receives earned income, such as wages, he may have a higher filing limit.
The IRS won't treat your child's Social Security benefits as your income. In fact, you cannot include them in your income even if you wish to. The only type of minor income you can elect to include with your own is investment or dividend income. However, if your child is a minor who must file a return because of Social Security benefits, you are responsible for signing and filing the return if the child is too young to do so himself.
Although you cannot claim your child's income as your own, you can pay the child's tax if you want to, and you can provide general information to the IRS about the return. If you sign the return, or if the child identifies you on the return as a third party designee, you can act as your child's representative during all interactions with the IRS that are connected with that tax return.
Only Social Security survivors' and disability benefits received by minors can be taxable. If you don't sign the return, or if your child forgets to identify you as a third party designee, you can become the child's representative by completing Form 2848. If your child receives Supplemental Security Income (SSI), the full amount of the benefits is exempt from tax, and neither you nor your child must include them on your income tax return. SSI is treated differently because it is a supplemental income source for low-income parents who have a child with a disability.
Amanda McMullen is a freelancer who has been writing professionally since 2010. She holds a bachelor's degree in mathematics and statistics and a second bachelor's degree in integrated mathematics education.