Q & A

What is defined as income for the earnings limit?

Complete Question: I am going to get Social Security benefits and I am not yet 66. I was told I will be subject to the earnings limit. I only work part-time, but I also have income from investments and some contract work I do on the side. Will everything I earn be subject to the limit?

Answer: The Social Security Administration (SSA) does not count everything that comes in as income. The major “income” categories that are not counted towards the limit are other government benefits, investment earnings, interest, pensions, annuities, and capital gains. Be aware, though, that if you are contributing to a retirement plan (such as a 401k) at your job, that will count as income if it is included in your “gross wages”.

You should also know that W-2 earnings from your part-time job and your contract work (self-employment) are calculated differently for the annual earnings limit. The SSA will look at your gross W-2 earnings and will count them when they are earned, not when they are received. (For example, if you worked in December and received the pay check in January, the earnings will be counted in December). For self-employment, on the other hand, the SSA looks at your net earnings, not your gross earnings. In addition, they are counted when they are received, not when they are earned.

Research Analyst & Certified Social Security Advisor
AMAC Foundation
Notice: If you have any additional questions about the annual earnings limit or any other Social Security issue, you can reply below. If you would like to discuss your situation privately, you can email C.J. at cmiles@amacfoundation.com. Please do not provide any personal identification information such as Social Security numbers.

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