Does Social Security Count as Income?

by on September 15, 2022

Social Security benefits are easily confused with Supplemental Security Income. Social Security benefits are based on prior work, and is for those retiring over the age of 65. SSI is assistance for those with a disability or low income. But the important question is, do either of these count as income?

Types of Income

Income is any cash or equivalent an individual receives to meet their need for food and shelter. This includes the receipt of any items which can be applied, either directly or by sale or conversion, to meet the basic needs of food and shelter.  

  • Earned Income: Any wages, royalties, honoraria, or earnings from self-employment.
  • Unearned Income: all income that is not earned, such as Social Security benefits, pensions, State disability payments, unemployment benefits, interest income, dividends, and cash from friends and relatives.
  • In-Kind Income: food and/or shelter you get for free or less than its fair market value.
  • Deemed Income: the part of the income of your spouse with whom you live or your parents with whom you live, which computes your SSI benefit amount.


What Income Does Not Count When Receiving SSI?

The SSI program doesn’t count as several types of income. Some of these include but are not limited to:

  • Income tax refunds
  • The first $65 of earnings
  • Interest or dividends received from resources excluded under Federal Law
  • Any assistance from a third party that pays your bills
  • The first $2,000 a year for participating in clinical trials
  • Supplemental Nutrition Assistance Programs
  • Home energy assistance
  • Certain exclusions on Indian Trust Fund payments
  • Assistance funded by state or local government
  • Some amounts of income received irregularly or infrequently
  • Assistance from non-profit agencies
  • Loans that you have to repay
  • Impairment-related work services for the disabled
  • Disaster assistance


How Does Your Income Affect SSI?

The Social Security Administration will limit your benefits if you’re working, and here’s how. First, they will disregard the first $65 you make every month. If you make less than that, your benefits will not change. However, any money you make above the $65 line will be reduced from your SSI benefits by half. For example, if you make $165 a month, only $50 will be deducted from your SSI benefits. 

Are Social Security Benefits Taxable?

While SSI assistance is not taxable, Social Security Benefits are. The tax is calculated by your total income and the benefits you received for a tax year. You will never pay taxes on more than 85% of your benefits; you only have to pay taxes if your income and benefits exceed a certain amount. However, if you only receive SSI and not Social Security Benefits, you do not have to pay taxes for the benefits.

SSI Changes in 2022

As of 2022, there is a 5.9% cost of living adjustment (COLA). COLA is based on the percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) from the third quarter of the last year, and is designed to prevent inflation from draining any benefits you would receive. COLA hasn’t previously been this high since 1982, only coming close in 2009. The income cap has also been raised for both workers under the retirement age, and those of the retirement age.