My husband just filed at 67. We have 2 underage children who are eligible for benefits on his record and I am not yet retirement age and am eligible for the child in care benefits. I'm not sure if I should take the child in care or just let the amount go to the children up to the family maximum, and also wonder if me or my children should take the 6 month retroactive benefits. It will be over 7 years before the oldest child ages out, and until that time, the two children's benefits would reach the family maximum, so until then it would be the same amount of benefits, just a matter of whether to split it 2 ways or 3 ways if I took the child in care benefit. We know the rules for using the benefits for the children are different than how a benefit for me can be spent, and we are fine with that, knowing that children's benefits are earmarked for children's expenses only - we would certainly need to use all the money for the children anyway. I have spoken to someone at my local social security office and have called the national service line and have received some conflicting answers. I know I need to file before 6 months have passed after my husband's filing, and I am hoping to get some answers before I do.
One question is - are the child in care benefits taxable? My husband still works and plans to continue working for several more years - and we are taxed at around 22%, so if it's taxable I would be inclined to not take the benefit for myself and let the children split the amount 2 ways, as theirs would not be taxable to us. The person at the local office said that neither children's benefits nor child in care benefits are taxable to the parents. The person at the social security national info line said it's a question for the irs, so I called the irs info line and that person said that they are not familiar with that benefit specifically but that it would be taxable to the person who has legal right to it.
Another question is - if I pass on the child in care now at the beginning, can I go back and apply for it later? Because a time will eventually come when the oldest child stops receiving benefits and the youngest child alone would not reach the maximum for family, where we would reach it for several more years if I also took the benefit at that time. I don't want to choose not to take it now if I would somehow be locked into that decision permanently.
Third question is about 6-month retroactive benefits. My husband was offered this and passed on taking it because he didn't want his and all of our benefits to go down as a result. My local office said that the children CAN still take the benefit, and that their monthly benefits would NOT go down as a result of taking it. I said I thought the benefits would always go down if you take the lump sum retro and the person said not for children. My husband was so convinced that their benefit amount would go down, that I called the national info number to ask. At the national number, at first they said that the children could take the retro if the father was ELIGIBLE for it, then she put me on hold to check with someone else and then said the children were not eligible for it if my husband passed on taking it. Which is correct? If it's not allowed, I know I would find out at the time of filing, or after, but if it is allowed, would their benefit go down? If it's true they get it with no penalty that's a no-brainer, but if the benefits will go down I want to be prepared ahead of time to do the math before I am in the office needing to make the decision. If the national info line is correct they are not eligible but I don't know who's right and want to be prepared with the correct info. Also, assuming the local office is correct and they can take the retro, but assuming that my husband is right and the benefits would go down (he thinks the local office is wrong about at least this part)....can I take the retro for one child, but not the other?.... depending on the math .....the child who is aging out sooner might benefit from it but the other might not.
Is there anything else I'm missing about considering underage children's benefits that would help them?
Thank you for any information you can give me!
Hi,
Yes, your child in care benefits would be paid to you for your personal use, so they are potentially taxable as your income (https://www.ssa.gov/planners/taxes.html). And, yes, you would always be free to file for the child in care benefits as long as you are eligible, although you could only claim benefits for up to 6 months prior to your month of filing and you would not be paid for any retroactive months if the family maximum amount had already been paid for those months.
With regard to your question about retroactive benefits for your children, they could not claim benefits for any month(s) prior to your husband's first month of entitlement. Their monthly benefit rate would not be lower if they received retroactive benefits, but your husband's would be lower if he chose to take retroactive benefits and that reduction would be permanent and it would carry over to the rate that you could potentially receive as a widow on his record.
So obviously, when choosing his month to start receiving benefits your husband must weigh all of the positives and negatives. Our maximization software is designed for that purpose, so you may want to strongly consider using it to determine the best overall claiming strategy for your family.
Best, Jerry
