Types of Unearned Income

• Unearned income is not earned through working a job or self-employment. Types of unearned income include unemployment benefits, pensions, Social Security benefits and interest income. State disability payments, child support and alimony payments, rental income and cash gifts from friends and relatives are other common types of unearned income. When determining whether you meet the income guidelines for a government benefit program, the Social Security Administration counts your gross income as a total of both your earned and unearned income.
  
  

Total Countable Income

• Because Supplemental Security Income payments are intended for low-income elderly, blind or disabled individuals, your SSI benefit is reduced by other income you receive. When calculating your monthly SSI benefit, Social Security subtracts your total countable income from the maximum federal benefit you could receive.
  
  Social Security excludes certain types of earned and unearned income from your gross income. The first $20 of unearned income and unearned income from food stamps, HUD rent subsidies, Pell Grants and state and locally funded need-based assistance programs are not counted. After deducting the applicable exclusions, the Social Security Administration adds together both your countable earned and unearned income to calculate your total countable income.
  
  

Reporting Changes

• You must report changes in both your earned and unearned income to Social Security. Changes in income can affect the amount of your benefit or your overall eligibility for SSI. Social Security recommends reporting changes as soon as possible but no later than 10 days after the end of the month in which they occurred. Increases or decreases in income can cause Social Security to either overpay or underpay you. In the case of an overpayment, you may have to pay money back to Social Security. If you are underpaid, you might not receive the amount of benefits due to you.
  
  

Penalties

• If you do not report a change in income, Social Security can impose a penalty that will reduce your monthly benefit. Intentionally failing to report changes can incur more serious penalties. You could lose your SSI payments for six months. Making false or misleading statements related to your income or continuing not to report changes can result in losing your SSI benefits for 12 months or even as long as 24 months.