Social Security Question

[Burke]

Have a client (minor child) whose mother died last year. Father was already deceased. Would this child be entitled to social security benefits? Lives with grandmother, who has legal custody. If so, would grandmother get check on behalf of minor child?

[sea-tax]

Have a client (minor child) whose mother died last year. Father was already deceased. Would this child be entitled to social security benefits? Lives with grandmother. If so, would grandmother get check on behalf of minor child?

I think so if mother or father had enough ss credits. I would have client contact social security administration.

[Burke]

I don't know why this did not occur to me earlier. Child has trust and I do her tax return, but have never reported any Social Security. It's possible neither parent worked long enough -- will have to check it out. Even if child qualifies, I don't suppose it would go into the trust.

[Beth]

Soc Security Surviving Child

Might it have an impact, if received, on the amount of support contributed by the child?

[veritas]

Child may have been

due SS when father died to begin with.

[FEDUKE404]

YES for Soc Sec

One thing I have learned about SS - when I think I have it figured out.....I don't!!

Having said that:

I agree with Veritas. A child under the age of 18 (or under age 19 and still in high school?), would seem to be entitled to SS benefits from a deceased parent. Of course, this assumes deceased was the actual parent and deceased had enough work credits, etc.

Similar rules would apply with the death of a second parent.

Benefits cannot be paid to a minor, and must be paid to a third responsible party, usually the surviving parent. One would think the grandmother could also serve.

Major frequently unknown caveat: The SS folks will send a document to the responsible party each year, and that person MUST state (and be able to prove!) where the funds went for the benefit of the child. (Grandma can't just take the funds and buy herself a new car.)

SS is a mountain of paperwork, but once they finally have the relevant facts they are quite good at doing everything retroactively. I would definitely pursue it. Be careful that if the "child" gets a large payment during 2008 or 2009, problems might occur with the 50% issues for claiming a dependent.

Good luck!

FE

[S T]

Child of deceased parent

Yes, by all means, file for the SS benefits.

There is some record keeping for the benefits that might be paid by SS on behalf of the child and have to be accounted for.

Here is a link to SSA http://www.ssa.gov/pubs/10084.html

Sandy

[Burke]

Thanks for all the information. From what I know of SSA, I agree with all posts and will check into it. I am pretty sure the rest of the family has not. The fact that the grandmother would have access to the money is the drawback and it would sit better if a proper accounting had to be done. And yes, it would possibly affect support issues. That's not a big deal. Exemption is only worth about $1,550. SS benefit would probably be more than that. I am thinking she should have qualified when father died years ago but don't know if they ever did anything about it.

[OtisMozzetti]

Plan WHEN the child's Soc. Security will be used for support

Be careful that if the "child" gets a large payment during 2008 or 2009, problems might occur with the 50% issues for claiming a dependent.
FE

You correctly said that problems "might" occur with the >50% issues for claiming a dependent. "Might" is correct because if the Soc. Security payments are filed away into the child's BANK ACCOUNT, and then used to pay <50% of the child's support (along with future Soc. Sec. benefits) in several future years; then the child hasn't been knocked out from being grandma's dependent.

[JohnH]

Wouldn't receipt of the SocSec benefits be vastly more important than the relatively small tax benefit derived from the tax exemption? Assuming a 30% combined Fed & State tax rate, the exemption is worth a little over $1K. Add in another $1K for the child tax credit if that's applicable and just to skew the numbers conservatively. I assume we're talking about SocSec benefits far in excess of $2K - right?

Even accounting for $2K - $3K or so of Earned Income Credit (in which case the income tax rate would drop to around 10% - 15% at most due to the lower income), there's still an overwhelming bias in favor of getting the SocSec benefit even if it means losing the tax exemption.

If I were supporting a grandchild, if you offer me $6K - $8K+ of cash toward their support and tell me I'll have to forego the tax exemption as a part of the bargain, I'll take the cash in a heartbeat.