Gardberg & Kemmerly, P.C. Attorneys at Law

Earned versus Unearned Income for Purposes of SSI


Whether a person receives earned or unearned income can make a difference in whether they can receive Supplemental Security Income. This is because a person’s income also determines if they are eligible for SSI. If a person’s income is more than the maximum benefit allowed they are not eligible for SSI for that month.

Income is anything in cash or in kind used to meet the claimant’s needs for food and shelter. Income is categorized as either earned or unearned. Earned income may be in cash or in kind, such as wages paid in cash or in kind, net earnings from self employment, and certain royalties. Unearned income is all income that is not earned income.

Social Security devised a formula to determine whether a claimant’s income precludes receipt of SSI. The formula for deducting income from the amount of SSI available depends on whether the income is earned or unearned. If income is earned, $20 is deducted from the amount of income. $65 is then deducted from what is remaining. The remainder is then divided in half. What is left is deducted from the maximum benefit amount. If the amount after deductions is more than the maximum benefit, the person is not eligible.

Unearned income is counted differently. Social Security looks unfavorably on unearned income. If income is unearned, the total amount of unearned income received per month is reduced by $20. That amount is then deducted from the maximum benefit amount. If the amount after deductions is more than the maximum benefit, the person is not eligible. As you can see, unearned income will reduce SSI benefits quicker than earned income.

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