In determining the amount a claimant receives for SSI benefits, the SSA considers the household income and resources. Generally, money coming to a household will have an effect on the benefit rate. That being said, there are exceptions that sometimes apply. One such exception is that that EITC refunds are excluded from consideration as a resource for 9 months. (See the SSA’s Procedure Operations Manual on the subject) This will mean that so long as this money is spent down 9 months after its receipt, it will not have an adverse effect on the SSI benefits. If the claimant or his family continues to hold the money after 10 months, then it will be counted as a resource and potentially cause a reduction in benefits received.
Please note, with SSI recipients and EITC in particular there can be a significant amount of confusion. Though the refund is excluded from resource consideration for nine months, the self employed earnings that served as the basis for this tax credit can be counted as income for SSI purposes. A common issue that occurs is that an SSI recipient fails to consistently notifying the SSA of self employed earnings while he is working throughout the year. When the recipient goes to file taxes, these earnings are finally reported to the IRS. The IRS in turn reports the earnings to the SSA. At this time, the SSA will usually issue a bill (Notice of Overpayment) to the recipient because he received more money than he was owed throughout the year. It may also trigger a review of a claimant’s case. To avoid this problem, an SSI recipient should report any work activity (including self employment) promptly to the SSA.
Finally, please be aware that fraud within the EITC program is rampant. If you or someone in your household is thinking of filing for EITC, you want to be very careful to review the filing that is done on your behalf. To be blunt, many of the “tax preparers” doing this work are untrained and unethical. They will happily commit fraud on a tax payer’s behalf and then leave them to deal with the ramifications. Common issues that occur are preparers grossly overstating a claimant’s actual earnings or the preparer outright inventing earnings that never existed.