Ask the Advisor: August 2021

Q:  Why Can’t Legal Guardians Receive Social Security Benefits on Behalf of Grandchild?

Q: We are raising our 6-year-old grandson under permanent court ordered guardianship to age 18.  However, we are not allowed an additional Social Security benefit for this child unless we adopt him.  Seems unfair since we have the same responsibility to support him.  This will create a tremendous financial hardship, should my wife or I pass away and lose our benefit.  We feel the rules should be changed to include benefits for permanent guardianships. -B.H.

A:  You bring up an important gap in our Social Security protections.  In order for children to qualify for a Social Security dependent benefit, that benefit would need to be based on an account of a parent who meets eligibility requirements for Social Security and is deceased, disabled, or retired.  The parent would need to meet the eligibility rules in order for your grandson to receive a benefit based on the parent’s account.  However, if the biological parent has not yet met all eligibility rules then, in order to receive a Social Security benefit, you would need to first adopt the child so that he qualifies for a benefit based on your account.

However, there might be other ways to augment finances, particularly through an additional tax exemption and the Child Tax Credit.  The American Rescue Plan Act (ARPA) of 2021 expands the Child Tax Credit for tax year 2021 in the following ways:

  • Taxpayers may receive part of their credit in 2021 before filing their 2021 tax return.
  • The amount of the credit will increase for many taxpayers.
  • The credit for qualifying children is fully refundable, which means that taxpayers can benefit from the credit even if they don’t have earned income or don’t owe any income taxes.
  • The credit will include children who turn age 17 or who are under that age in 2021.

For tax year 2021, families claiming the Child Tax Credit will receive up to $3,000 per qualifying child between the ages of 6 and 17 at the end of 2021.  Under prior law, the amount of the credit was up to $2,000 per qualifying child under the age of 17 at the end of the year.

The increased amounts are phased out for incomes over $150,000 for married couples filing jointly and qualifying widows or widowers, $112,500 for heads of household, and $75,000 for all other taxpayers.

According to the IRS, advance payments of the Child Tax Credit will be made from July through December to eligible taxpayers and will be up to 50% of the credit.  Advance payments will be estimated from your 2020 tax returns, or 2019 returns if the 2020 returns are not filed and processed yet.

If you have not filed a return for 2020, the IRS urges people with children to file one as soon as possible.  Even if your grandson was not with you in 2020, eligible taxpayers have the opportunity to update information about changes in income, filing status or the number of qualifying children.  The IRS is continuing to update information about this credit which can be found at:

With so many grandparents becoming more involved in the day – to - day care of their grandchildren you may learn that you qualify for other programs that can reduce healthcare, food, and other expenses.  We recommend that you take time to try the National Council on Aging’s online “BenefitsCheckUp” screening tool to learn about benefit programs in your area.