As a representative payee, you've been entrusted with managing someone else's Social Security benefits—and that comes with clear rules about how the money can be used. Spending decisions can feel stressful when you're not sure what's allowed, what's not, and how to document everything. This guide breaks down exactly what representative payees can (and can't) spend benefit funds on.
In this article, we'll cover:
- The core rule for how representative payees must use benefit funds
- What expenses are considered the beneficiary's "current needs"
- How to handle saving leftover funds
- Spending categories that raise red flags with Social Security
- How to document your spending for the annual accounting report
- Tools that make tracking representative payee expenses easier
The Core Rule: Current Needs First
Social Security's fundamental rule for representative payees is simple: benefit funds must be used for the current maintenance needs of the beneficiary. Current maintenance means the day-to-day costs of the beneficiary's food, shelter, clothing, medical and dental care, and personal comfort items. The beneficiary's needs always come first, and every spending decision should be made with their best interests in mind.
If all of the beneficiary's current needs are met and there are funds left over, you're expected to save the excess for the beneficiary's future needs. You cannot use remaining funds for your own expenses, even if you're a family member who provides unpaid caregiving. The funds belong to the beneficiary, period.
What Counts as Current Maintenance Needs
The broadest and most important spending categories are food and housing. This includes rent or mortgage payments, property taxes, utilities (electricity, gas, water, internet, phone), groceries, and home maintenance. For beneficiaries in care facilities, it includes the facility's room and board charges.
Medical and dental expenses are also a priority. Copayments, prescription costs, over-the-counter medications recommended by a doctor, dental work, vision care, therapy sessions, and medical equipment all qualify. If the beneficiary has Medicaid, Medicare, or other insurance, these programs should be used first—but out-of-pocket medical costs are a perfectly appropriate use of benefit funds.
Clothing and personal items are covered as well. This includes everyday clothing, seasonal items like winter coats, personal hygiene products, and basic personal comfort items. For beneficiaries in facilities, personal items might include a TV, radio, books, or other things that contribute to their quality of life.
Education and rehabilitation expenses are allowed when they benefit the beneficiary. Tuition, books, vocational training, and therapies that support the beneficiary's development or independence are all appropriate uses of funds.
Recreation and leisure are sometimes overlooked, but they're legitimate expenses too. Social outings, community activities, hobby supplies, and entertainment that contributes to the beneficiary's well-being are all acceptable. Social Security recognizes that quality of life matters and that basic enjoyment is a real need.
Transportation costs related to the beneficiary—getting to medical appointments, school, social activities, or running errands on their behalf—are appropriate expenses. This can include gas, public transit fares, rideshare costs, or vehicle maintenance for a car used primarily for the beneficiary's transportation.
Saving Leftover Funds
If the beneficiary's current needs are fully met and money remains, you should save it in an account that is clearly titled to show the representative payee relationship. For example: "Jane Smith, representative payee for John Smith." These saved funds are available for the beneficiary's future needs, which might include unexpected medical expenses, a housing deposit, adaptive equipment, or other costs that arise.
It's important not to commingle saved funds with your own money. Keep the beneficiary's savings in a dedicated account. If the beneficiary receives SSI, remember that their total resources (including savings you hold on their behalf) must stay under the $2,000 resource limit (or $3,000 for couples). For SSDI-only recipients, there's no resource limit, so savings can accumulate without a compliance concern.
What You Cannot Spend Funds On
You cannot use the beneficiary's funds for your own expenses, even indirectly. This means you can't pay your own rent, utilities, groceries, or personal costs from the beneficiary's account. If the beneficiary lives with you and you share household expenses, you should pay only the beneficiary's proportional share from their funds.
Gifts to others from the beneficiary's funds are generally not appropriate unless they're small, reasonable, and the beneficiary has expressed a desire to give the gift—and only after all their own needs are met. Extravagant gifts or regular transfers to other people will raise serious questions.
Investments beyond basic savings accounts require careful consideration. While it's not strictly prohibited to invest conservatively on behalf of a beneficiary, high-risk investments, speculative purchases, or any investment where the funds might not be readily available for the beneficiary's needs can be problematic. When in doubt, keep savings in a safe, accessible account.
You also cannot charge the beneficiary for your services as a representative payee if you're an individual payee. Organizational representative payees are allowed to charge a fee (up to 10% of the monthly benefit), but individual payees—including family members—cannot collect a fee.
Documenting Your Spending
Every year, Social Security requires representative payees to file an annual accounting report detailing how the beneficiary's funds were used. For individual payees, this is Form SSA-6230; for organizational payees, it's Form SSA-6234. The report asks you to categorize spending into broad categories: housing, food, medical/dental, clothing, personal items, and savings.
You don't need to provide individual receipts with the report, but you do need to be able to account for the funds accurately. If Social Security questions your report or audits your spending, you may be asked to produce detailed documentation. This is why keeping ongoing records—bank statements, receipts for major purchases, and a simple spending log—is so important.
The best practice is to track spending as it happens rather than trying to reconstruct it at the end of the year. A dedicated bank account with clear transaction records makes this much easier than working with cash or mixed accounts.
Making It Easier with the Right Tools
The administrative burden of being a representative payee is real. Between tracking spending, saving records, and filing annual reports, it can feel like a part-time job on top of the caregiving you're already doing. Having the right banking setup can significantly reduce this burden.
Managing someone else's benefits is a big responsibility. Purple offers checking accounts designed for representative payees, with built-in spending tracking and organized records that make your annual accounting report straightforward.