The SSI Penalties for Having Savings Bonds

Supplemental Security Income uses a monitoring and reporting system to determine monthly payment amounts. The Social Security Administration monitors and calculates SSI benefits based on information provided by the recipient. It offsets monthly payments by calculations for earned and unearned income along with living arrangement deductions when applicable.

Interest on savings bonds count as unearned income for SSI. However, if you fail to report that you own savings bonds as assets, you may incur penalties or sanctions.

The SSI recipient can have ​$2,000​ in resources or assets and qualify for a monthly SSI check. The Social Security Administration also lists couples as being eligible with up to ​$3,000​ in assets. Resources or assets include cash, bank accounts, stocks and bonds and similar money or moneymaking ventures.

If your resources, including savings bonds, total less than ​$2,000​ (​$3,000​ for couples), you will need to report the income when you cash in the bonds. SSI regulations exempt some assets, including your house and lot, a car, life insurance or burial insurance up to ​$1,500​ and burial plots.

If you cash a savings bond, you must report the income to the Social Security Administration office where you report monthly changes. Unearned income includes interest and has a ​$20 exemption​ each month. You can calculate the effect this has on your SSI check by subtracting the ​$20​ from the total received. Unearned income counts at ​100 percent​, so subtract the remainder from your SSI benefit.

If you cashed in ​$120 in savings bonds​, you would subtract ​$100​ from your SSI benefit. You must report income ​within 10 days​ of the end of the month in which you received it. This shows up in your check ​two months​ forward from the time you report it.

The Social Security Administration imposes penalties or sanctions on individuals who do not report timely or who are dishonest in reporting. A penalty is ​$25 to $100​, depending on the severity of the failure. If you are overpaid, Social Security may require you to repay SSI funds. Sanctions apply if you give false information or withhold information.

If you have savings bonds and do not identify them as assets, you may receive sanctions. You receive no benefits for ​six to 24 months​ if sanctions apply. If you give away assets, Social Security may impose ​36 months​ of sanctions. The sanctions depend on the value of the asset given away.

The SSA has programs that allow individuals to save money or become self-sufficient. The PASS program or Plans to Achieve Self Support requires a written plan to start a business or get training for a specific job. Money saved does not count in your resources or assets if you have an approved PASS plan.

An individual development account is another way to save money for a business, a first home or for your education. These accounts require you to have earned income, but the diverted income does not count for SSI monthly calculations.