When will 1099’s for 2014 be mailed?

The new year always brings questions about taxation of Social Security benefits and receipt of 1099’s.

Earlier this week, I wrote about when people might have to pay federal income taxes on their Social Security benefits. No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules. 

The SSA-1099 for Tax Year 2014 will be mailed by January 31, 2015.  

Referring to my post of January 5, these are sent to your mailing address as shown on Social Security records so I hope yours is correct. 

You can request a replacement SSA-1099 for Tax Year 2014 on or after February 1, 2015. 

If you need a replacement SSA-1099 for Tax Year 2013 or earlier, see instructions here.

Do I pay income tax on my Social Security benefits?

Q: Do I pay income tax on my Social Security benefits? 

A: Perhaps. Here is information from the Social Security website, www.socialsecurity.gov. Including links to IRS information, more details are at www.socialsecurity.gov/planners/taxes.htm 

Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits. 

No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules. 

If you file a federal tax return as an “individual” and your combined income is

·  between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.

·  more than $34,000, up to 85 percent of your benefits may be taxable. 

If you file a joint return, and you and your spouse have a combined income that is

·  between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits

·  more than $44,000, up to 85 percent of your benefits may be taxable. 

If you are married and file a separate tax return, you probably will pay taxes on your benefits.

 

Receiving Social Security? Have you moved?

When benefit amounts change for a person receiving either Social Security or Supplemental Security Income (SSI), a letter is sent by regular Post Office mail telling the new amount and reasons for the change. 

As routinely done, recently the Social Security Administration has been mailing letters to beneficiaries explaining the 2015 cost-of-living increase benefit changes. Many of those letters cannot be delivered because Social Security records had an old address and Post Office mail forwarding requests were either not done or had expired.

One result is that the people involved do not receive important benefit information sent to them unless they contact Social Security to ask about it. These recontacts create more work for both the person and Social Security representatives. 

Have you moved this year while receiving either Social Security or SSI benefits? Did you report your new mailing address so that your records stay accurate? If not, do this now. 

Update your address in several ways.  

Online: Social Security beneficiaries can update their address online at any convenient time if they have a personal my Social Security account. SSI recipients cannot update their address this way but other my Social Security services such as getting an online letter to prove your benefit amount remain available. For your convenience, this is the suggested method. Create your my Social Security account at www.socialsecurity.gov/myaccount/.

By phone: you can telephone the Social Security national toll-free number, 1-800-772-1213 / TTY 1-800-325-0778, from 7:00am – 7:00pm local time. National numbers are answered at different sites across the country. Representatives there can help you with other Social Security business as well.  

In person: You can phone or visit your local Social Security office. Local office hours vary but most have public hours of 9:00am – 3:00pm on Monday, Tuesday, Thursday and Friday and 9:00am – noon on Wednesday. Learn local office hours and locations here, in the “Find an Office” section. 

Even when your benefit payment continues going to the same bank, credit union or other financial institution, be sure to notify Social Security of mailing address changes. This helps you. It helps Social Security. 

By whatever method you choose, keep your mailing address current when you receive Social Security or SSI benefits. Important information is mailed to you during the year. Make sure you receive the news.

Did Social Security always have a COLA?

With the 1.7 percent cost-of-living adjustment (COLA) for 2015 about to begin, it is worth noting that many pensions do not have a cost-of-living adjustment (COLA) provision. Unlike the inflation protection provided by Social Security retirement, survivors and disability benefits, for pensions lacking a COLA your starting amount is your final amount, even if you receive the pension for many years. 

One of the many valuable aspects of Social Security benefits, the annual, automatic review of Social Security amounts for a possible cost-of-living adjustment (COLA) is now such an accepted feature of the program that it is difficult to imagine a time when there were no COLAs. However, such a time existed. Social Security beneficiaries did not originally receive cost-of-living adjustments.  

Although the first SSA benefit was paid in January 1940, the first cost-of-living adjustment related increase was not until 1950 followed by a second in 1952. Part of the 1950 Amendments, the first Social Security COLA was signed into law by President Truman. Neither of these two increases was automatic. Both times, Congress enacted special legislation for the purpose.  

Automatic Social Security COLAs began in 1975, based on 1972 legislation. Signed into law by President Nixon, this legislation established automatic COLAs based on the annual increase in the consumer price index, if any. 

Since then the automatic cost-of-living adjustment has increased Social Security benefits in almost all years. Learn COLA percentages for 1975-2014 at www.socialsecurity.gov/cola/automatic-cola.htm 

The 1.7 percent cost-of-living adjustment for 2015 begins with benefits that more than 58 million Social Security beneficiaries receive in January 2015. Increased payments to more than 8 million Supplemental Security Income (SSI) beneficiaries will begin on December 31, 2014.

Details about the 2015 COLA are here.

More than monthly payment amounts change due to a COLA. Other related changes are here.

 

 

 

Reminder about 2015 Social Security & SSI payment dates

I posted the 2015 schedule of payment dates for Social Security and Supplemental Security income in September. As 2015 gets closer, I am getting many requests for the schedule so here it is again. The link is http://www.socialsecurity.gov/pubs/EN-05-10031-2015.pdf.

A link to the 2015 payment calendar is on my Areavoices homepage blogroll. 

With several exceptions, since 1997 Social Security payment dates are based on the number holder’s (NH) date of birth. You are the NH if receiving Social Security on your own work record. If receiving based on the work of someone else, that person is the NH.    

Therefore, if you receive Social Security retirement or disability through your own work, the payment date is based on your birth date. A child or spouse receiving benefits on your record will also have a payment date based on your birth date. 

 A couple can receive Social Security payment on different days if each person is receiving his or her own retirement benefit.   

Social Security benefits are generally paid on the second Wednesday if the number holder was born within the first 10 days of a month, the third Wednesday if born within the 11-20th days and on the fourth Wednesday if born within the 21-31st days.  

Not all Social Security payment dates are birth date based. If you received Social Security before May 1997, your payment date remained the third of the month. People eligible for both Social Security and Supplemental Security Income (SSI) generally receive SSI on the first and their Social Security on the third of the month.  

Supplemental Security Income (SSI) funds are usually paid on the first of a month. 

Regular payment dates for both Social Security and Supplemental Security Income (SSI) are advanced if the usual date falls on a day when financial institutions such as banks or credit unions are closed so, for example, SSI payments for January 2015 will arrive on December 31, rather than on January 1. 

One more item about payments: routine Social Security retirement, disability and survivors benefits are paid in the following month, meaning benefits for January arrive in February. Routine Supplemental Security Income (SSI) payments are for the month paid so SSI arriving in February is for February.

 

 

 

 

 

Savings will not prevent Social Security disability benefits

Sometimes a topic suddenly starts to generate questions. The following question came up three separate times while I was teaching recently. Perhaps it will interest you too.  

Q: How much money can I have in savings before my Social Security disability stops?  

A: Your savings will not stop Social Security disability benefits. Whether rich or poor, your financial value does not matter for Social Security retirement, survivors or disability benefits.  

Work is at the base of all Social Security benefits, not financial need. Requirements vary with type of benefit but the person whose Social Security number record is involved needs enough work to be insured or benefits are not payable. Learn more about Social Security benefits at www.socialsecurity.gov 

If you receive Social Security through your own record, then your work record was used. If you receive benefits through another person’s record, such as a child eligible through a parent, then that person had to have enough work. 

What can confuse people on this topic is that the Social Security Administration is responsible for more than Social Security retirement, survivors and disability benefits.  

Eligibility for the low-income Supplemental Security Income (SSI) program does include income and resource requirements. SSI can provide benefits to those over age 65 as well as blind or disabled children or adults. SSI is very different from Social Security, but both programs are administered by the Social Security Administration. 

People receiving SSI must stay below certain income and resource levels to remain eligible. Resources include savings and other items of financial value that you own and can turn into cash but not everything you own is counted toward the resource limit. For an eligible individual the total level of counted resources is $2,000. For an eligible couple, this amount is $3,000. These resource levels will continue for 2015. If exceeded, the person is no longer eligible.

Some types of resources that do not count toward these totals are the house you live in and household goods, usually one vehicle, some insurance policies and some burial funds. This is not a complete list. An overview of Supplemental Security Income resources is here 

Since Social Security and SSI are completely different programs, one person can receive both of them if the separate requirements are met.

In summary, if a person receives both Social Security and Supplemental Security Income (SSI), his or her savings or other resources will not stop Social Security benefits but they can end SSI benefits.

 

 

 

 

Annual SSA disability report released

The Annual Statistical Report on the Social Security Disability Insurance Program, 2013 was released this week.

This annual report provides program and demographic information about the people who receive Social Security disability benefits—disabled workers, disabled widow(er)s, and disabled adult children. Topics covered include beneficiaries in current payment status; benefits awarded, withheld, and terminated; geographic distributions; Social Security beneficiaries who receive Supplemental Security Income; and the income of disabled beneficiaries.

Following is from the Highlights section of the report:

Size and Scope of the Social Security Disability Program

Disability benefits were paid to just over 10.2 million people.

Awards to disabled workers (868,965) accounted for over 90 percent of awards to all disabled beneficiaries (965,190).

In December, payments to disabled beneficiaries totaled about $11.2 billion.

Benefits were terminated for 769,171 disabled workers.

Supplemental Security Income payments were another source of income for about one out of seven disabled beneficiaries.  (Note: not everyone receives Social Security through his or her own work.  For example, family benefits to disabled children or disabled widows or widowers are possible. 

Profile of Disabled-Worker Beneficiaries

Workers accounted for the largest share of disabled beneficiaries (87.4 percent).

Average age was 53.

Men represented under 52 percent.

Mental disorders was the diagnosis for about a third.

Average monthly benefit received was $1,146.42.

Supplemental Security Income (SSI) payments were another source of income for about one out of eight.  

Social Security benefits and citizenship

Q: I am a legal resident alien, working full-time and paying Social Security taxes on my earnings. Will I be able to receive Social Security benefits at retirement? 

A: Yes, assuming you work long enough and meet all usual requirements. United States citizenship is not required to receive Social Security benefits. Your future retirement, or payment of any Social Security benefits through your work record, will be based largely on your work history, not citizenship. You will need to prove legal admittance into the country when applying for benefits. 

Visitors to the United States can usually obtain a Social Security number (SSN) only if authorized to work by the Department of Homeland Security. Work authorization is routinely verified when a person applies for an original, name change correction or replacement card.  

If you become a citizen in the future, contact Social Security to update your citizenship on your Social Security number record. This will make a future application for retirement benefits easier, especially if you use the online application because, since your record would show United States citizenship, legal admittance would not have to be established.  

Learn the documents needed and print the Social Security number application at www.socialsecurity.gov/ssnumber/. Documents submitted must be originals certified by the issuing agency, such as Homeland Security, and are immediately returned. Self-made photocopies or notarized copies are not accepted.

To protect your personal information, SSN applications cannot be submitted electronically. No fees are involved for any SSN action. Protect yourself by going to the official Social Security website, www.socialsecurity.gov for SSN information.

 

Should Mom give me the money?

Q: I am 15 and receive Social Security, which goes to my Mom. Should she should give me the money? 

A: When a person younger than age 18 receives Social Security or Supplemental Security Income (SSI), the payment is almost always sent to an adult on their behalf rather than directly to the child. This adult is called the representative payee and it is his or her responsibility to direct the management of the funds. 

Representative payees are also appointed for adults who are incapable of managing their benefits. Payees are often family members but can be different people or even an organization. 

In the booklet A Guide for Representative Payees, a new payee is instructed in how funds should be used and how funds not immediately needed should be held for the future. Payees are told about required reports to Social Security about the funds. Representative payee instructions go into detail about how funds are to be used.  

Should your Mom give you the money? Not directly but the funds must be used for you. Just handing the benefit money to you could mean that she was not exercising proper control of the funds in your best interest. 

A key representative payee responsibility is to know beneficiary needs so that the Social Security or SSI funds can be best used for the person’s care and well-being, in particular making sure that day-to-day food and shelter needs are met. Having basic needs of food, shelter and clothing met indicate benefits are used for you even if you do not directly handle the money.  

Social Security benefits for children might continue or end at age 18. If they continue past age 18, the child often starts to receive them directly, without having a representative payee. Consider asking your Mom to share or create a budget with you. This would show you how the funds are used while giving you practice in handling money.

Reporting possible Social Security fraud

Q: Someone I know receives Social Security disability and is working part-time. How can this be looked at without me providing my name? 

A: Social Security takes potential fraud very seriously. I will write about that in a moment but first will say a few words about this question of working and disability benefits. 

It is a wrong, but popular, assumption that people receiving disability benefits cannot have a job. 

In addition to non-medical requirements, Social Security disability or Supplemental Security Income (SSI) disability have a strict, work based, definition of disability and relatively few people found eligible eventually return to work at levels high enough to end benefits. Despite this, people receiving disability related benefits are encouraged by the Social Security Administration to return to work and many do on a limited basis. If you receive disability benefits and start to work, contact Social Security to report the work and learn the specific details you need to know. 

Rules are different for Social Security and SSI disability but both programs have multiple work incentives to help people return to work. Beneficiaries are required to report work activity. Social Security disability reporting requirements are here; SSI requirements here. 

Returning to the reporting fraud question, you are encouraged to do so through the Social Security Office of the Inspector General (OIG). The direct website of OIG is http://oig.ssa.gov/.  The OIG site is easily reached through the “contact us” links on the Social Security homepage, www.socialsecurity.gov. From the “contact us” page, click on “Report Fraud, Waste or Abuse.” 

The OIG website  has lots of information including some situations, with examples, that may be considered as fraud, waste or abuse against the Social Security administration. Several of these are:

1. Making false statements on claims: When people apply for Social Security Benefits, they state that all information they provide on the forms are true and correct to the best of their knowledge. If a person reports something they know is not true, it may be a crime

2. Concealing facts or events which affect eligibility for benefits: It may be considered fraud if a person makes a false statement on an application or does not tell SSA of certain facts that may affect benefits.

3. Misuse of benefits by a representative payee: When a person receiving benefits cannot handle their own financial affairs, Social Security appoints a relative, friend, or another individual or organization to handle their Social Security matters. This person or organization is called a Representative Payee and it may be a crime if a payee misuses these benefits.

4. Buying or selling counterfeit or legitimate Social Security cards.

This is not a complete list. 

To report a suspected fraud, follow the instructions here. You can do this online or in other ways. Note what information will be requested. You can remain anonymous, but that might limit an OIG investigation.