Not All Income is Equal!

Did you know that not all income is treated the same when accessing disability and other public benefits? The type of income you receive could have a big impact on your eligibility for some benefits. Read on to learn more!

What is income?

Money is considered income the month you receive it. Any income that is saved into the next month becomes a resource. Some public benefits have income limits, and some have both income and resource limits. This article only talks about income, but if you need help understanding what is considered a resource or resource limits, a Financial Coach can help you.

Different Types of Income

All income is either earned income or unearned income.

Earned Income

Earned income is exactly what it sounds like, money that you earn! The most common type of earned income is money you are paid from your job if you are working. Earned income also includes income from self-employment and tips. When determining the amount of earned income you have, most agencies, including Social Security, are looking at your gross earnings (earnings before taxes). The most common exception to this is when you are self-employed. When you are self-employed, your earned income is generally your income after allowable business expenses are deducted.

Unearned Income

Most other money you receive is considered unearned income. Payments from Social Security and other benefits are unearned income as well cash gifts or monetary support from others. Unearned income also includes pensions, awards and prizes, life insurance proceeds, and inheritances. Generally, if you did not have to exchange your time or labor to get the money, it will be considered unearned income.

Why does this matter?

The type of income you receive can have a big impact on the amount of SSI, SSDI, or SNAP you may be eligible for. For example, unearned income does not affect SSDI, but it lowers SSI and SNAP payments more than earned income. If you have earned income and are receiving Social Security benefits, you may be able to use work incentives to help you keep more of your benefit. Understanding the difference between earned and unearned income can help you prepare for how your benefits may be impacted by income you receive.

If you need help understanding if money you are receiving is considered earned or unearned income and how it will affect your benefits, reach out to a Financial Coach for support!