Social Security: Benefit Recipients Should Know About These Two Credits This Tax Season
Retirement / Social Security
This year in particular, it’s more important than ever to pay special attention to how you file your taxes; As a result of last year’s stimulus bill, you could be eligible to credits and rebates you don’t usually qualify for. These special credits are available to you even if you receive Social Security Supplemental Income and/or do not make enough money to file a tax return — or simply do not file one.
See: Child Tax Credit Update — Yellen Urges Americans To File Taxes To Get Unclaimed Money
Find: Child Tax Credit Payments Likely To Have Minimal Impact on Your Tax Refund
Here are the big two credits to watch out for this tax filing season if you receive SSI or Social Security benefits.
The Child Tax Credit
As part of the stimulus relief bill, the child tax credit was expanded to $3,600 per eligible child under the age of six and $3,000 per eligible child ages six to 17. Advance monthly portions comprising half of this credit began going out to families in July 2021 and were paid out through December 2021, with the other half of the credit available now, during tax filing time. If you did not claim this credit last year, fret not — you can simply claim it now, although it might be called a rebate credit depending on what you claimed last year.
Your child tax credit payments will not affect your Social Security benefits, the Social Security Administration noted in a blog post. If you receive SSI, any child tax credit you receive, including advance payments received in 2021, won’t count as income or resources for 12 months after you receive it when considering income eligibility for SSI. This suggests the SSA wants to see that you needed the money and are not simply holding it in a bank account.
See: Social Security Schedule — When the First COLA Checks Will Arrive in February 2022
Find: Social Security Refund — Here’s Why Some College Students Can Get Money Back
Earned Income Tax Credit
The EITC provides low-to-moderate-income workers and families certain program-specific tax breaks. You can use the credit to reduce the taxes you owe to the IRS, which could in turn increase your overall tax refund. Like the CTC, the EITC is determined by your income and the number of qualifying dependents.
You can still receive the EITC if you receive Social Security or SSI, as long as you meet the rules for the EITC program. Sometimes, if you have a child with a disability, you can claim the EITC.
Social Security benefits and SSI do not affect one’s eligibility for the EITC. Your disability insurance or SSI payments might be counted as earned income for the EITC, but that will depend on a number of factors. To claim the EITC, the first step is to make sure you file a tax return for 2021.
More From GOBankingRates