SSI

• Supplemental Security Income is a payment made to U.S. citizens and legal residents who meet two criteria. Firstly, they must be either 65 or older, blind or disabled. Secondly, they must have low incomes and resources. Unlike some forms of Social Security payment, SSI is not dependent on previous work histories or tax payments. A standard federal payment can be optionally topped up by a state from its own funds.
  
  

SSI for Children

• Disabled children can be eligible for SSI payments, subject to slightly different income and disability requirements. If the child is working, his income limit is $1,000 a month as of 2011. The income of other family members is also taken into account and can affect both eligibility and the amount received. Unlike with adults, where the test is whether the person is capable of work, the child's disability must lead to "marked and severe functional limitations."
  
  

Taxation for Parent

• A parent or guardian usually makes the application and receives the SSI payments in the capacity of a representative payee. However, legally speaking, SSI payments are made to the child rather than the parent and thus do not form part of the parent's income. Because of this, the question of taxation does not arise for the parent.
  
  

Taxation for Child

• Most forms of Social Security payment must be reported on tax returns. Whether or not the payment is taxable depends on the individual circumstances including what other income the person receives, how much her total income is, and her tax filing status. In the case of SSI however, the payments are not taxable in any circumstances. The payments do not need to be listed on tax returns.