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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7225
Experience:  15years with H & R Block. Divisional leader, Instructor
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State of California -- regarding SSI and SSDI. Because of

Resolved Question:

State of California -- regarding SSI and SSDI. Because of a tramatic event that left three children PTSD and alone, elderly grandparents took them in. One grandparent is disabled and receives SSDI; the other receives social security also. All three children received SSI benefits.

In order for the grandparents to care for the children they had to apply for HUD housing,n as they were living on their SS in a one bedroom retirement home. They did not declare the children's SSI benefits as income because they understood that SSI benefits were not taxable and parents did not need to declare those benefits as income. HUD housing says that the grandparents should have declared the children's SSI benefits ; that it was illegal not to, and they want to be reimbursed for the months the family has lived in the HUD home.

It is also my understanding that SSI benefits are not taxable and don't have to be declared as income? I would like to know if this is the case.
Submitted: 11 months ago.
Category: Tax
Expert:  Robin D. replied 11 months ago.

Robin D :

Hello and thank you for using Just Answer,
You are correct that SSI is not taxable if that is the only income received. The SSI received by children are also not included on a parent's or grandparent's tax return.
I believe the issue is what HUD perceives to be income when they offer assistance.

Robin D :

I will need to look into HUD regulations about SSI payments.

Robin D :

A list of the Part 5 income "inclusions" and "exclusions" is published in the Code of Federal Regulations at 24 CFR 5.609.

Robin D :

This table presents the Part 5 income inclusions as stated in the Code of Federal Regulations.









































General CategoryStatement from 24 CFR 5.609 paragraph (b) (April 1, 2004)
1. Income from wages, salaries, tips, etc.The full amount, before any payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation for personal services.
2. Business IncomeThe net income from the operation of a business or profession. Expenditures for business expansion or amortization of capitalindebtedness shall not be used as deductions in determining net income. An allowance for depreciation of assets used in a business or profession may be deducted, based on straight-line depreciation, as provided in Internal Revenue Service regulations. Any withdrawal of cash or assets from the operation of a business or profession will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the family.
3. Interest & Dividend IncomeInterest, dividends, and other net income of any kind from real or personal property. Expenditures for amortization of capital indebtedness shall not be used as deductions in determining net income. An allowance for depreciation is permitted only as authorized in number 2 (above). Any withdrawal of cash or assets from an investment will be included in income, except to the extent the withdrawal is reimbursement of cash or assets invested by the family. Where the family has net family assets in excess of $5,000, annual income shall include the greater of the actual income derived from all net family assets or a percentage of the value of such assets based on the current passbook savings rate, as determined by HUD.

4. Retirement & Insurance Income
The full amount of periodic amounts received from Social Security, annuities, insurance policies, retirement funds, pensions, disability or death benefits, and other similar types of periodic receipts, including a lump-sum amount or prospective monthly amounts for the delayed start of a periodic amount (except as provided in number 14 of Income Exclusions).
5. Unemployment & Disability IncomePayments in lieu of earnings, such as unemployment and disability compensation, worker's compensation, and severance pay (except as provided in number 3 of Income Exclusions).
6. Welfare AssistanceWelfare Assistance. Welfare assistance payments made under the Temporary Assistance for Needy Families (TANF) program are included in annual income:

  • Qualify as assistance under the TANF program definition at 45 CFR 260.31; and

  • Are otherwise excluded from the calculation of annual income per 24 CFR 5.609(c).


If the welfare assistance payment includes an amount specifically designated for shelter and utilities that is subject to adjustment by the welfare assistance agency in accordance with the actual cost of shelter and utilities, the amount of welfare assistance income to be included as income shall consist of:

  • the amount of the allowance or grant exclusive of the amount specifically designated for shelter or utilities; plus

  • the maximum amount that the welfare assistance agency could in fact allow the family for shelter and utilities. If the family's welfare assistance is reduced from the standard of need by applying a percentage, the amount calculated under 24 CFR 5.609 shall be the amount resulting from one application of the percentage.


7. Alimony, Child Support, & Gift IncomePeriodic and determinable allowances, such as alimony and child support payments, and regular contributions or gifts received from organizations or from persons not residing in the dwelling.
8. Armed Forces IncomeAll regular pay, special day and allowances of a member of the Armed Forces (except as provided in number 7 of Income Exclusions).

Robin D :

As you can see (hopefully) under #4 above
The full amount of periodic amounts received from Social Security, annuities, insurance policies, retirement funds, pensions, disability or death benefits, and other similar types of periodic receipts, including a lump-sum amount or prospective monthly amounts for the delayed start of a periodic amount (except as provided in number 14 of Income Exclusions).

Customer:

Could you put this into layman's language for me?

Robin D :

Yes, sorry

Robin D :

You should have included the SS payments in the applicatuion

Robin D :

application* sorry

Robin D :

Even though they are not taxable for income taxes the amounts are used to determine the assistance by HUD

Customer:

So, what you are saying is that HUD can charge them more money for the home based on their SSI "income," even though Federal and State laws say they don't have to declare this as income?

Robin D :

They do not have to report the amounts received for income tax purposes but yes, unfortunately HUD requires the information to calculate the amount.
Here is a link to the page for HUD that shows what is considered as income (not for taxes but for the program)
http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/affordablehousing/training/web/calculator/definitions/part5#whose

Customer:

Thank you. I will look at it now.

Robin D :

You are most welcome

Robin D :

Perhaps they can pay back in installments

Customer:

So, if I understand this correctly, HUD can fine them for not disclosing the SSI income? They are poor; they barely make it. Isn't there another law that says children being cared for by a parent that is on SSDI (being cared for by disabled caregiver) fall into a different category (Auxiliary SSI I think it is called). Would that even make a difference in this case.

Robin D :

The rules for the members of the family in the HUD program do not change. there are exclusions to income that would not be used but you must not confuse the tax laws for income with the HUD requirements for income.

Robin D :

Just because the income is not taxable does not mean it is excluded for HUD purposes.

Customer:

Interesting. You would think all government agencies would have to abide by the same rules/laws. This family is basically screwed! Thank you for your help.

Robin D :

Income tax is totally different.

Robin D :

Your positive rating is always thanks enough.


 

Customer:

I see that.

Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 7225
Experience: 15years with H & R Block. Divisional leader, Instructor
Robin D. and 2 other Tax Specialists are ready to help you
Expert:  Robin D. replied 11 months ago.
Our chat has ended, but you can still continue to ask me questions here until you are satisfied with your answer. Come back to this page to view our conversation and any other new information.

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Expert:  Robin D. replied 11 months ago.
I sincerely XXXX XXX rules were different.

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