Food Stamps, officially known as the Supplemental Nutrition Assistance Program (SNAP), help people with low incomes buy food. To figure out who qualifies for food stamps and how much assistance they get, the government looks at your income. But not all income is the same! This essay will explain what “unearned income” is when it comes to Food Stamps and break down some common examples.
Defining Unearned Income
So, what exactly is unearned income? **Unearned income is money you receive that you didn’t have to work for.** Think of it as money that just shows up, like a gift, or money you earn without providing a service. This is different from earned income, like wages from a job. Unearned income is very important to understand because it impacts how much in food stamps you are eligible for.
Social Security and SSI Payments
Social Security benefits, including retirement, survivor, and disability benefits, are usually considered unearned income. These payments are provided by the government based on your work history or the work history of a family member. They are not payments you receive for doing a current job.
Supplemental Security Income (SSI) is also unearned income. SSI is a federal program that provides monthly payments to people with limited income and resources who are disabled, blind, or age 65 or older. Both Social Security and SSI payments are considered income when determining your Food Stamp eligibility and benefit amount. The Food Stamp program counts these payments as a resource, and depending on the amount, it can change your eligibility.
Here’s a breakdown of how these payments are generally treated:
- Social Security retirement benefits are considered unearned income.
- Social Security Disability Insurance (SSDI) is considered unearned income.
- SSI payments are always considered unearned income.
- The amount of this income will be factored into your SNAP eligibility.
It’s important to report all of these income sources to your local Food Stamp office. Failure to do so could result in a penalty.
Pension and Retirement Income
Money you receive from a pension or retirement plan is also considered unearned income. This money comes from your former job and is provided after you retire. The source of this money is an account you or your employer contributed to over time. This includes private pensions, military retirement pay, and payments from government retirement plans.
When you start receiving retirement payments, it’s important to tell the Food Stamp office. They will need to know the amount of your monthly payment. This is because the amount of the pension or retirement income will affect your SNAP benefit amount. Not reporting the retirement income can get you in trouble.
Here are some examples:
- Private pension from a former employer
- Military retirement pay
- Government retirement benefits (like from a state or federal government job)
- 401k or other retirement plan withdrawals
Also, keep in mind that sometimes there might be taxes taken out of these payments. The Food Stamp office will likely want to know your gross (before tax) income.
Unemployment Benefits
Unemployment benefits are another type of unearned income. When you lose your job and are eligible for unemployment, the state provides you with money to help you while you look for a new one. Because you are not actively working for this income, it’s classified as unearned.
It is very important to report any unemployment benefits you receive to the Food Stamp office. These benefits will be considered when determining your Food Stamp eligibility and your benefit amount. The same rules apply, the Food Stamp office will want to know the amount you are receiving.
Here is an example of some unemployment considerations:
| Benefit Type | Unearned Income? |
|---|---|
| State Unemployment | Yes |
| Federal Pandemic Unemployment Compensation (PUC) | Yes (if applicable) |
| Disaster Unemployment Assistance | Yes (if applicable) |
Keep in mind that unemployment benefits can change week to week, so it’s important to keep the Food Stamp office updated if the amount changes.
Alimony and Child Support
Alimony (also known as spousal support) and child support payments are generally considered unearned income. This is because these payments are received from a former spouse or the other parent of your child and aren’t earned through your own work or services. This is one of the main sources of income that the Food Stamp office looks at.
The amount of alimony and child support payments is important for determining your eligibility and benefit level. Make sure to report these payments to the Food Stamp office when you apply and whenever the amount changes. It’s very important to have documentation when dealing with alimony and child support.
Here’s why it matters:
- These payments are considered income.
- It can influence your eligibility for Food Stamps.
- It impacts how much money you receive in food stamps.
It’s important to keep accurate records of these payments. This includes records of when payments were made and how much you received. Keep any official documentation, like court orders or payment stubs.
Interest and Dividends
Interest earned from savings accounts, certificates of deposit (CDs), and other investments is often considered unearned income. Dividends from stocks and mutual funds are also in this category. This type of income is not connected to work, but instead comes from having assets.
The amount of interest and dividends can be added to your total income for Food Stamp purposes. It is important to know the amount of this income. The Food Stamp office will need to know the amount of interest and dividends you receive. You may need to provide statements from your bank or investment accounts to prove the amount.
Here are some examples of sources of interest and dividend income:
- Interest from savings accounts
- Interest from certificates of deposit (CDs)
- Dividends from stocks
- Dividends from mutual funds
While small amounts of interest or dividends might not significantly impact your Food Stamp benefits, it is still very important to report this income.
Gifts and Inheritances
Gifts and inheritances are usually considered unearned income. This means money or property you receive from someone else without having to work for it. It is not something you earned through labor.
The rules about gifts and inheritances and food stamps can sometimes be confusing, so be sure to find out the specifics from your caseworker. If it is considered unearned income, it can affect your eligibility for Food Stamps and the amount you receive. A lump-sum inheritance might be treated differently from regular gifts, so it’s important to understand the local rules.
Here’s some more info:
- Gifts of cash are typically considered unearned income.
- Inheritances of cash are generally considered unearned income.
- Gifts of goods (like a new TV) are often not considered income.
The best way to figure out how gifts and inheritances are treated is to ask your caseworker or to find information in your specific state’s SNAP guidelines.
Conclusion
Understanding unearned income is important for anyone receiving Food Stamps. It helps you understand how your benefits are calculated and ensures you can accurately report your income to the Food Stamp office. By knowing what income sources are considered “unearned,” you can make sure you stay in compliance with the rules and get the help you need to buy food. Remember to always report any changes in your income promptly and to ask your caseworker if you have any questions!