Q&A: Death doesn’t take a financial holiday. Here’s a cautionary tale

Dear Liz: My daughter has two children, ages 2 and 4. Recently the children’s father took his own life. He was 27. The job he worked as long as I knew him paid him in cash, so he didn’t pay into Social Security. Does this mean the children cannot receive survivor benefits from Social Security?

Answer: If the father never worked at a job that paid into Social Security, your grandchildren — and your daughter — won’t qualify for the survivor benefits they could have received had he been paid legally rather than under the table.

Their one hope is if he had a previous job that did pay into Social Security.

At 27, he would have needed at least six quarters of coverage to trigger survivor benefits, says Bill Meyer, founder of Social Security Solutions, a claiming strategies site.

The older a person is, the more quarters are needed to qualify for benefits, but no one needs more than 40 quarters. The amount of earnings required for a quarter of coverage is $1,360 in 2019. Once you earn $5,440, you’ve earned your four quarters for the year.

If the father had earned those six quarters, his death would trigger survivor benefits for his children that typically last until age 18 (or until 19, if they are still in high school full time). Your daughter also would be entitled to benefits until the younger child turned 16, because she’s caring for the deceased person’s minor children.

It’s possible this young man was paid under the table because he was not able to work legally in the U.S. If that’s the case, he and his family wouldn’t qualify for Social Security benefits even if payroll taxes had been deducted. If he opted for cash because he or his employer didn’t want to pay taxes, though, that was a choice that had expensive repercussions for the people he left behind.

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  1. Jeff Shaw, cpa says

    Dear Liz,
    Regarding the young widow whose children likely cannot receive Social Security survivor benefits based on their deceased father’s account, because he was paid in cash and didn’t pay into Social Security: there is one more faint hope. Though his earnings were not subject to Social Security tax withheld from wages, perhaps he reported them as “self employment income” on his income tax returns. For benefits, self employment tax paid on income tax returns would be equivalent to social security tax paid from wages. If the widow has copies of her husband’s tax returns, or their joint returns, she could look for Schedule SE or “Other Taxes” on Form 1040. Or call Social Security Administration before abandoning all hope.

  2. amanda Sandstrom says

    The mother of the children is only entitled to “child in care” benefits if she was married to the father of the children, nowhere in the letter does the writer say they were married. Please clarify this for your audience. I work for SSA and get tired of misinformation and then I’m blamed for their bad decisions.

  3. Suzanne Rague says

    It’s too bad this worker did not report the cash he received as self-employment income on his tax return, and pay associated employment taxes. I don’t want to blame the deceased and his survivors in this very sad situation. But readers should be aware that Social Security taxes are paid not only by employers. I expect that many of those being paid under the table are US citizens and/or legally able to work in the United States, and are choosing to avoid paying payroll taxes.