to improve the beneficiary's living conditions.to meet the beneficiary's continuing basic needs.If there's money left over after paying for the beneficiary's immediate needs, you must use the remaining disability funds on the following: Using Back Pay to Improve the Beneficiary's Living Conditions Remember that the Social Security benefits you receive on behalf of someone else-including SSI and SSDI back payments-must only be used for the beneficiary's welfare.Īfter taking care of the beneficiary's immediate needs for food, shelter, and clothing, you can spend some of the back pay to improve their living condition or make special purchases. Current needs include anything the beneficiary needs right away, such as: (Learn more about how Social Security chooses a representative payee.) Spending Restrictions for You as a PayeeĪs a representative payee, it's your responsibility to make sure the beneficiary you're assisting has all their immediate needs met. You might be appointed as a representative payee for a beneficiary who isn't able to manage their own finances due to:Īnd all minor children receiving Social Security benefits will have a representative payee. If a disability beneficiary has a representative payee, it means that the SSA believes they aren't able to handle their own money responsibly. Social Security has a lot more spending rules for representative payees. Back Pay Spending Rules for Representative Payees Learn all the rules about spending and saving SSI back payments. But if you're owed more than a couple thousand dollars, Social Security will pay your back pay in two or three installments, set six months apart.Īlthough it might be tempting just to plunk that wad of cash into savings, hanging on to too much could put you over the SSI asset limit and cause your benefits to stop. If you're owed a small amount of back pay, Social Security will issue it in a single lump-sum payment. The agency won't tell you how to spend the remaining back pay you receive, but you'll need to spend it fairly quickly to avoid becoming ineligible due to the SSI resource limits (more on this below). (Learn how to file taxes on disability back pay.) Spending Your SSI Back PaymentĪlthough you won't have to pay taxes on your SSI income (it's not taxable under federal rules), Social Security will pay your attorney or advocate using part of the SSI back benefits you're owed. But if you know how to do it, you can make some of the back pay count toward prior years to keep this from happening. Even if your only income is SSDI and your monthly amounts aren't enough for the IRS to consider them taxable, your lump-sum back payment might be enough to might push you over the limit for that year. Second, the Internal Revenue Service (IRS) considers SSDI benefits as taxable income if you earn above a certain amount. (Learn more about how Social Security disability lawyers are paid.) Attorney's fees are generally a few thousand dollars, but can go up to $7,200, Social Security's limit. ![]() Social Security will take the attorney's fee out of the back pay before the agency sends your lump sum to you. But there are some expenses you might need to cover.įirst, if you hired a disability attorney or advocate to help with your claim, your legal representative will be paid from the back pay owed to you. You can use that money however you like or choose to save it. Social Security has no spending restrictions on SSDI back payments if you're the beneficiary. (Learn how Social Security calculates back pay.)Īlthough Social Security generally won't tell you how to spend your own monthly SSI or SSDI benefits, some factors could affect how you handle a large back payment. how much your monthly SSI or SSDI benefits are.how long it took Social Security to decide your claim.How much you'll get depends on the following: How Much SSI or SSDI Back Pay Will You Get?Īfter your disability application is approved, Social Security will start sending your monthly disability payments and pay you all the back pay you have coming. Social Security disability insurance ( SSDI), orįirst, let's briefly look at what affects the amount of past-due pay you'll get.Social Security has different back payment spending rules depending on what type of disability payments you're receiving: Rules for Spending Your Own Disability Back Pay Watch Out for Overpayments of SSI or SSDI Back Pay.Special Rules for Disabled Children on SSI.How Rep Payees Should Handle Leftover SSI Funds.Protecting the Beneficiary's SSI Eligibility. ![]()
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