Do Social Security Benefits Count as Income for a Dependent?
Social Security's role in determining tax dependency is nuanced. Learn how taxable and total benefits are considered differently in the calculation.
Determining if an individual qualifies as a dependent involves a series of specific tests from the Internal Revenue Service. The process can be confusing when the potential dependent receives income from Social Security. How this income is treated under dependency rules depends on which test is being applied, as the definition of “income” is not the same in every context.
Understanding the Dependency Tests
To claim a person as a dependent, they must meet the requirements of either a “Qualifying Child” or a “Qualifying Relative.” Each category has a distinct set of tests. All dependents must also be a U.S. citizen, U.S. national, or a resident of Canada or Mexico, and they cannot file a joint tax return with a spouse unless it’s solely to claim a refund.
A person is a Qualifying Child if they meet four tests:
- Relationship: The child must be your son, daughter, stepchild, foster child, sibling, or a descendant of any of them.
- Age: The child must be under age 19, under age 24 if a full-time student, or any age if permanently and totally disabled.
- Residency: The child must have lived with you for more than half the year.
- Support: The child did not provide more than half of their own support.
An individual who is not a Qualifying Child might still be claimed as a Qualifying Relative. This category also has four tests, and the gross income and support tests are where Social Security benefits become a deciding factor. The person must meet the following requirements:
- Not a Qualifying Child: The person cannot be your qualifying child or the qualifying child of another taxpayer.
- Member of Household or Relationship: The person must either live with you all year as a member of your household or be related to you in a way specified by the IRS, such as a parent, grandparent, or in-law.
- Gross Income: The person’s gross income must be below a specific annual limit.
- Support: You must provide more than half of the person’s total support for the year.
Social Security’s Impact on the Gross Income Test
The gross income test for a Qualifying Relative requires the person’s gross income to be below an annual limit ($5,050 for 2024). For this test, only the taxable portion of Social Security benefits is included in the calculation. If none of the benefits are taxable, they do not count as gross income for this test.
To find the taxable portion, you must calculate the person’s “provisional income.” This is the sum of their modified adjusted gross income (MAGI), non-taxable interest, and 50% of their Social Security benefits. For a single individual, benefits are not taxable if provisional income is $25,000 or less. Up to 50% of benefits may be taxable with provisional income between $25,001 and $34,000, and up to 85% may be taxable if it exceeds $34,000.
For example, a parent receives $12,000 in Social Security and has a $20,000 pension. Their provisional income is $26,000 ($20,000 pension + $6,000, which is 50% of their Social Security). Because this is above the $25,000 threshold, a portion of their benefits is taxable. The taxable amount is the lesser of 50% of their benefits ($6,000) or 50% of the amount over the threshold ($500). In this case, $500 of their Social Security is taxable, resulting in a gross income of $20,500 ($20,000 pension + $500 taxable Social Security), which is above the $5,050 limit, disqualifying them as a dependent.
Social Security’s Impact on the Support Test
Unlike the gross income test, the support test considers the entire amount of Social Security benefits, regardless of taxability. This test, which applies to both Qualifying Child and Qualifying Relative determinations, evaluates who provides more than half of a person’s total living expenses, such as food, lodging, and medical care.
When a potential dependent receives Social Security, the funds are considered self-support to the extent they are used for living expenses. If the individual uses their Social Security income to pay for necessities, that amount counts toward their own support total.
For example, a parent has total living expenses of $20,000. The parent receives $9,000 in Social Security and uses it all for their own housing and food. If their adult child provides the remaining $11,000, the child has provided more than half of the support and meets the test. However, if the parent’s Social Security was $12,000 and they used it for support, the child’s $8,000 contribution would not be more than half, and the test would fail.
Tax Filing Requirements for a Dependent
A person claimed as a dependent may still be required to file their own tax return. The filing requirement depends on their gross income. For 2024, a single dependent under age 65 must file a return if their earned income is over $14,600 or if their unearned income, which includes taxable Social Security benefits, is over $1,300.
If a dependent’s income exceeds the filing thresholds, they must file a Form 1040. On this form, the total Social Security benefits received are reported, along with the specific taxable portion.
It is important to distinguish Social Security benefits from Supplemental Security Income (SSI). SSI payments are not taxable and are not considered income for the gross income test. For the support test, SSI is considered support from a third party (the government), not the individual. This can make it easier for a taxpayer to meet the requirement of providing more than half of the support.