The SSI Penalties for Having Savings Bonds

by Linda Richard ; Updated July 27, 2017

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, but if you fail to report that you own savings bonds, you may incur penalties or sanctions.

Resources

The SSI recipient can have $2,000 in resources or assets and qualify for a monthly SSI check. 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, 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.

Income Reporting

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.

Penalties and Sanctions

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.

Options

SSI 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.

About the Author

Linda Richard has been a legal writer and antiques appraiser for more than 25 years, and has been writing online for more than 12 years. Richard holds a bachelor's degree in English and business administration. She has operated a small business for more than 20 years. She and her husband enjoy remodeling old houses and are currently working on a 1970s home.