Tax season can bring welcome relief in the form of a refund—but if you receive SSI, you might be worried about whether that refund could push you over the resource limit and put your benefits at risk. Here's what Social Security says about tax refunds and how to handle them wisely.
In this article, we'll cover:
- Whether SSA counts a tax refund as income for SSI
- The resource exclusion period for tax refunds
- How the Earned Income Tax Credit (EITC) is treated
- What happens if your refund pushes you over the resource limit
- How to spend down your refund before the exclusion expires
- Tips for managing tax refunds as an SSI recipient
Tax Refunds Are Not Counted as Income
The good news is that federal tax refunds are not counted as income by SSA for SSI purposes. This includes refunds from the Earned Income Tax Credit (EITC) and the Child Tax Credit. These refunds don't reduce your SSI payment in the month you receive them.
This protection exists because tax refunds are a return of money you already earned—not new income. Congress specifically excluded them from SSI income calculations to make sure low-income families could benefit from tax credits without losing their disability benefits.
The Resource Exclusion Period
While your tax refund isn't counted as income, it does become a countable resource if you still have it after a certain period. Federal tax refunds (including EITC) are excluded from your countable resources for 12 months after the month you receive them.
This means if you receive your refund in February 2026, it won't count as a resource until March 2027. You have a full year to use the money without worrying about the resource limit. After that 12-month window closes, any remaining refund money in your bank account counts toward the $2,000 individual limit (or $3,000 for couples).
What You Should Do With Your Refund
The safest approach is to spend your tax refund on eligible expenses within the 12-month exclusion window. You can use it to pay bills, buy household essentials, make car repairs, pay for medical expenses, invest in education or job training, or contribute to an ABLE account if you're eligible.
If you're concerned about keeping track of which funds in your bank account are from your tax refund versus other sources, consider keeping clear records—a screenshot or printout of your refund deposit can help if SSA ever questions your resource level.
Don't Forget State Tax Refunds
The 12-month resource exclusion applies specifically to federal tax refunds. State tax refund treatment may vary depending on your state's rules and how SSA categorizes the payment. If you receive a state refund, it's worth checking how SSA would treat it to avoid surprises.
File Your Taxes Even If You Don't Think You Need To
Many SSI recipients don't realize they may be eligible for the EITC or other refundable tax credits, even with very low income. If you worked at all during the year, it's worth filing—you might get money back that you didn't expect. Free tax preparation is available through IRS Volunteer Income Tax Assistance (VITA) programs at locations nationwide.
Tax season doesn't have to mean stress about your SSI. Purple helps you track your resources all year long, so you always know where you stand—even when extra money comes in.