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keeperumiami
keeperumiami, Senior Tax Expert & Financial Planner
Category: Social Security
Satisfied Customers: 6181
Experience:  Sr Tax Expert/Financial PlannerCPA/PFS (retired)Over forty years of advising individuals & small businesses
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My son recieves SSI- his father passed away and my son will

Customer Question

My son recieves SSI- his father passed away and my son will receive a portion of his father's life insurance policy. I am told this does not have to be claimed as income. Is this correct? I worry about it affecting his future SSI.
Submitted: 2 months ago.
Category: Social Security
Expert:  keeperumiami replied 2 months ago.

Hello, my name is***** goal is to give you a complete & accurate answer. I am working on your request now & I will respond as soon as possible.

Expert:  keeperumiami replied 2 months ago.

Life Insurance proceeds are not subject to federal or state income taxes, that is correct.

Customer: replied 2 months ago.
my son does not need to report it as income to social security?
Expert:  keeperumiami replied 2 months ago.

For purposes of Social Security, there is "earned income" (which is generally taxable to the recipient) & "unearned income" which may or may not be taxable to the recipient (for example life insurance proceeds are not taxable but dividend and interest & capital gains are unearned but taxable).

However for Social Security reporting purposes this is what is included in their definition of "reportable" unearned income:

  1. Life insurance proceeds and other death benefits,to the extent that the total amount is more than the expenses of the deceased person's last illness and burial paid by the individual;

  2. Gifts and inheritances.

Please remember to rate my response as that is the only way I will receive credit for assisting you today.

Thanks very much,

Steve G.

Expert:  keeperumiami replied 2 months ago.

Just checking in.....................

I'd like to close out this question before the end of the month, if possible.

I would appreciate it if you would take a moment to let me know if I can assist you further and if you would provide a rating for my responses as indicated above.

Thanks again,

Steve G.