What Counts For The Annual Earnings Test?

Both previous posts this week were about the annual earnings test, also known as the retirement test. The annual earnings test concerns how your own employment earnings in a calendar year affect your Social Security in that year.  

The earnings test does not apply if you receive Social Security because you are disabled. Contact Social Security for specific instructions if you return to work while receiving disability benefits.

The earnings test includes only your personal gross wages or net income from self-employment for the entire calendar year. That is all. Your other income or income of a spouse is not applicable for your earnings test purposes. Pension payments, annuities, interest, dividends or a good day at bingo are not included earnings for the annual earnings test even though they might be for income tax.

Each person receiving Social Security benefits has an earnings test level if they are younger than full retirement age (FRA).  For example, say both you and your spouse receive Social Security retirement and you are both younger than full retirement age all year. Since you both are younger than FRA all year, in 2013 each of you can individually earn up to $15,120 before exceeding earnings test limits. What if just one of you is employed? The same amount applies because the retirement test amount is for the individual person, not the couple. 

How does Social Security know your estimated earnings for the year? You tell us. If you plan to earn over retirement test levels, contact Social Security and provide an estimated earnings amount. If necessary to prevent a future overpayment to you, Social Security will withhold benefits based on the earnings estimate provided. Revise your estimate as needed if plans change during the year. When the year or work ends, report your final earnings so Social Security can review your record and be sure you were paid all benefits due.

Note: Benefits paid to other family members through your work record can be withheld if your earnings exceed earnings test amounts. If your retirement benefits are withheld because of your estimated earnings, benefits of people receiving through your record, such as a spouse or child, can also be withheld.