Handling Back Pay Child Benefits Paid to A Now Adult Child

By / January 14, 2017 / After You’re Approved for Social Security Disability & SSI / 16 Comments

Learn how to handle a delayed Social Security Disability payment for a minor child of a disabled adult, when it arrives in the child’s name after they’ve reached adulthood. Must the money be shared with the parent?

Dear Disability Advisor,

My stepmother recently informed me that I would be receiving in my name back pay benefits for when I lived with her as a teen off her disability claim. I am now 32 and had no idea this claim existed. But she has told me that the money belongs to her. Am I to hand it over to her? Will I have to pay taxes on the amount? Which is over $40,000 that has been awarded. Just really want to do the right thing but some of that money could really help out me and my family.

Susie

Dear Susie,

The money legally belongs to you, and you will have to pay taxes on at least part of it. How much will be taxable will depend on your total adjusted gross income when you file your taxes. When you receive the funds, I suggest that you get an estimate of your 2017 tax liability by contacting a tax accountant so that you can pay the estimated taxes when due, which is usually the calendar quarter in which the taxable income is received.

You might consider giving part of the benefits that do not have to be used for taxes to your mother in consideration of the expenses she had caring for you when you were a minor and while her Social Security claim pended for a number of years.

Sincerely,
The Disability Advisor

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  • Dear Muruq,

    $1,200 a month gross wages will not cause a reduction in your son’s benefits. He is currently receiving a reduced benefit because someone besides his parents is paying for all or part of his shelter or someone other than his parents or the SNAP program is providing his food. If you use his SSI benefits or your wages to pay his share of housing, you can report the change to Social Security and two months after the change, his benefits will be increased to $735. (Note that you do need to report your work by the tenth of the month following the month in which you receive your first paycheck[s].)

    Sincerely,
    Kay

  • You are welcome, Barbara.

  • Dear Barbara,

    The online status will not change until the judge has formalized the approval and the decision letter has been written and signed. The guideline for this to happen is sixty days, although it can be less or more time.

    Sincerely,
    Kay

  • Dear Harley Max,

    If you are also approved for Social Security Disability (SSDI) and your SSDI rate is higher than your SSI rate, you will receive SSDI back pay, but it will be reduced by the amount of SSI payable to you for the same months. Stated another way, if you are eligible for both benefits, the $50,000 you anticipate in back pay will be paid out, some in SSI and some in SSDI.

    Sincerely,
    Kay

  • Dear Sabrina,

    Retroactive benefits will be limited to six months before the month in which you filed an application for your daughter.

    Sincerely,
    Kay

  • Dear Harley,

    If you are owed $50,000, SSI will be paid first. If your Social Security is more than your SSI monthly benefit, SSI will stop when Social Security starts. At that time you can request release of the balance of SSI back pay based on no longer being eligible for SSI. Any of the $50,000 not paid as SSI will be paid as Social Security back pay. (Note that if you had an attorney, your attorney fees could be $6,000 withheld from each of the benefits, SSDI, SSI, and the children’s benefits.

    Sincerely,
    Kay

  • Dear Harley,

    If your earnings record is sufficient to provide dependent benefits, the children will be paid for the same months you are including back pay. Their benefits will end at age eighteen or if still in high school at the earlier of age nineteen or when they graduate. No benefits are paid for college student status.

    Sincerely,
    Kay

  • Dear Michele,

    SSI back pay is paid first. Typically SSI back pay is paid in up to three installments six months apart and the first two will not exceed $2,205. However, if after your Social Security Disability (SSDI) starts you are no longer eligible for SSI, you can request the remaining SSI installments to be released. It can take a couple months after the SSI has been set up for SSDI monthly payments to begin. SSDI back benefits will usually be paid after monthly benefits start, and it will be offset (reduced) by the amount of SSI benefits payable for the months in which SSDI and SSI eligibility overlap.

    If you listed your son on your application, your application is the beginning of an application for him; however, you should contact Social Security about the dependent benefits to complete the application. If he is over eighteen when the benefits are paid, it is likely that they will be paid directly to him. If they are paid earlier you will have to apply to be payee for him.

    Sincerely,
    Kay

  • Dear Sharlarria,

    The next installment could be paid any time in April. If you have not received it by the end of the month, I suggest that you follow up with your local Social Security office.

    Sincerely,
    Kay

    • Shalarria

      Thanks Ms Kay

  • Dear Casey,

    I suggest that you start out by talking to the person who was your representative payee when your claim was approved and ask about the back pay and how it was either spent or saved. If your claim was filed and processed quickly, there may not have been any SSDI back pay because the first five full calendar months of disability are not paid. And, SSI back pay could have been only a couple months worth if you were approved quickly because you were in a coma.

    If you do not receive a satisfactory explanation, you can go to Social Security and make a written complaint about the handling of your benefits. If you are now mentally capable to handle your own funds, you can have your physician make a statement about your competency on form SSA-787 and you can file an application to be your own payee. The form is available at http://www.ecpayee.org/uploads/8/8/7/4/8874367/doctor_statement_ssa_787.pdf.

    Sincerely,
    Kay

  • Dear Shalarria,

    Your child should receive the second installment in the month of April.

    Sincerely,
    Kay

  • Dear Terri,

    Probably there is not prohibition against filing on your own. You can probably make the application on your own if you are confident you can find out how to do so in your state and you are confident that you will understand all the legal requirements including various filings that are involved.

    Sincerely,
    Kay

  • Dear Terri,

    Your grandchildren can qualify for benefits only if you adopt them or their parents are deceased or disabled and receiving disability benefits.

    Sincerely,
    Kay

  • Dear Nahisha,

    If your Social Security Disability benefit is less than $755, you may be eligible for federal Supplemental Security Income (SSI) as well. Some states offer an SSI state supplement. If you live in one of those states, the income threshold is a little higher. If your income is below $755, you can apply; if it is somewhat over, I suggest you inquire at your local Social Security office as to whether your state has a supplement and if so what the income limit is and where to apply–at SSA or at a state office.

    Sincerely,
    Kay

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