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  1. #1
    Join Date
    Jun 2010

    Post Earnings unreported to SSI

    What is the name of your state (only U.S. law)? California

    Please help.

    My mother is on SSI Disability in California. She was taking things that my wife and I would give to her and a few books she'd buy from the goodwill and sell them on EBay. She spent about 30 cents on a book and sold it for 99 cents on eBay grossing $100 monthly (if you do not subtract the expenditures). She did not think that a net income of $70 a month had to be reported to SSI. She was wrong. After a couple years her apartment complex looked closer at her bank statement and seen the additional $100 monthly (they won’t take into consideration her expenditures from eBay) and is calling her on it. They told her to file some papers establishing what she’s doing as a business and want an account for all the gifts and money in her bank. She has fully stopped selling on eBay out of fear that she is now going to lose her SSI. We don’t know what to do.

    1) Does she still have to fill out the business paperwork the apartments are asking for now that she stopped?
    2) When/If they report to SSI that she has not been reporting extra earnings, will she lose her SSI?
    3) What do we do :,(

  2. #2
    I believe the IRS requires a tax return be filed whenever a person nets over $400 a year in self-employment income. Hers would be $70 times 12 or $840. So, sounds like she is behind in filing an income tax return. She would then have to pay Social Security (FICA) taxes on the profit. That tax return (schedule C) would then be used as proof of the self-employment income for any year and would be used in determining SSI payments.

    SSI has an earned income disregard of the first $65 a month in either wages or self-employment income, so there would be a tiny overpayment for the past. But SSA has to know about the earned income in order to disregard it.

    Obviously someone knew that income was supposed to be reported. Someone just thought that $70 was too little. What amount did someone think need to be reported? $170, $570, $700, $7000? Sounds like no one bothered to find out the answer until now.

    When SSI does a redetermination, they may also look at her bank statements for the last few years and see those extra deposits and without a tax return to show this is a business, they may consider it unearned income and then there is no $65 earned income disregard.

    My advice? File the tax return and report the income to SSI. Stop trying to hide it. She may even qualify for a small earned income tax credit from the IRS if she files the tax return.

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