Social Security and Tax Season: What You Need to Know
Recently I became aware that government mail, including mail from the Social Security Administration, does not get forwarded with a U.S. Postal Service change of address, unless you pay for a premium forwarding service. If the person who is expecting mail from the SSA does not themselves notify the SSA of a change of address, they will be waiting a long time for their check, tax statement, etc. This is particularly troublesome at tax time when there is a filing deadline looming, but no benefit statement. Fortunately, SSA has another way for you to obtain that important tax document – by accessing a mySocialSecurity account online at https://www.ssa.gov/myaccount/. If you are currently receiving Social Security benefits, the following tax tips could be important to you, even if you are not required to file a federal tax return.
The Child Tax Credit
You can claim the Child Tax Credit for any qualifying child even if you do not usually file a federal tax return. This credit is worth up to $3,600 for each qualifying child under age 6 and up to $3,000 for each qualifying child age 6-17. As long as a married couple’s income is less than $150,000 or a single parent’s income is less than $112,500, they are eligible for the full credit. A qualifying child is a child who (1) is under the age of 18; (2) is your own child, adopted child, stepchild or foster child; (3) has lived with you for more than half of 2021; (4) has not paid more than half their own expenses; and (5) is a U.S. Citizen, U.S. national, or U.S. resident alien. If you receive SSI, the Social Security Administration will not count the Child Tax Credit as income or resources for 12 months after you receive it. Claiming the Child Tax Credit is done by filing a federal tax return.
The Earned Income Credit
The Earned Income Tax Credit can be claimed, again, by filing a federal tax return. It provides qualifying low- to moderate-income workers with a tax break by providing for a credit that can be used to reduce taxes owed or increase a refund. To qualify for this credit, you must (1) have worked and earned income under $57,414; (2) have investment income below $10,000 in tax year 2021; (3) have a valid Social Security number by the due date of your 2021 return, including extensions; (4) be a U.S. citizen or resident all year; and (5) not file Form 2555 (related to foreign income).
Disability payments qualify as earned income depending on the type of disability payments you get and your agent when you start to get the disability payments. If you get disability retirement benefits before you reach the minimum retirement age as defined by the retirement plan, the benefits count as earned income. If you get disability insurance payments, your payments do not qualify as earned income if you paid the premiums for the insurance policy. Disability benefits from Social Security Disability Insurance, Supplemental Security Income (SSI) and military disability pensions do not count as earned income.
Similar to the Child Tax Credit, the refund you get when you claim the Earned Income Credit does not count as income for at least 12 months after you receive it.
Check your Earnings History
Tax time is a good time to remember to review your earnings history by looking at your Social Security statement. Your future Social Security benefits will be based on the earnings history received from the IRS, so it is important to make sure it is accurate.
Hook Law Center: Anya, it seems to us like dogs get all the fun. They get to go outside in nice weather and run around to their hearts’ content. Why aren’t more cats allowed outside to play?
Anya: It is funny that you asked this question. My humans have started taking me outside on nice days…on a leash of all things! In all seriousness, even though some people believe that cats need to be allowed outside to be happy, there are good reasons that cats should not be allowed to freely roam the outdoors. Not only is the lifespan of indoor cats five times longer than cats who spend their lives exclusively outdoors, but cats who go outside can be exposed to fleas, ticks, ear mites, intestinal worms and ringworm, not to mention diseases like feline leukemia, distemper and upper respiratory infections. The biggest threat to indoor cats is boredom. If your cat seems desperate to go outside, they may just need more entertainment and stimulation, through the use of indoor items like scratching posts and interactive toys. You can rest assured that your indoor cat is happy if they play with their toys and interact with their environment, scratch their appropriate scratching toys, and are relaxed with any humans and other pets who live in the house.
Jennifer S. Rossettini
757-399-7506 | 252-722-2890
Jennifer Rossettini is a Shareholder of Hook Law where she focuses her practice in the areas of elder law, estate planning, estate and trust administration, and financial planning. Her practice includes complex estate planning for clients with a net worth over $5 million as well as simple plans for individuals with very limited assets. Ms. Rossettini rejoined the firm in 2018 after spending ten years as a CERTIFIED FINANCIAL PLANNER™ professional with the wealth management divisions of two regional financial institutions. She is a member of the Financial Planning Association, serving as Secretary for the Hampton Roads chapter and serves on the Board of Directors of the non-profit organization, PrimePlus Senior Centers. Jennifer lives in Virginia Beach with her husband and two daughters. She is active in the Girl Scout organization, serving as both a troop leader and as the treasurer for the local Service Unit.
- Elder Law
- Estate & Trust Administration
- Estate Planning
- Financial Planning