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Income That Reduces Social Security Benefits If you are still working after starting Social Security benefits and under age 65, beware of the Social Security Earnings Test. Until you reach age 65, Social Security will subtract money from your retirement check if you exceed certain earnings limits which is recalculated every year. If you are 62 through 64 one dollar is deducted for every two dollars earned over the exempt amount of $10,080 ($840 monthly) in 2000.When calculating your income to determine whether your Social Security benefits will be reduced include: * Salary and wages * Net earnings from self-employment * Bonuses and commissions * Annuity payments under an employer's plan or system that does not qualify for an IRS tax exemption IRA and Keogh plan contributions (don't include payments from these plans) Don't include: * Assistance from federally sponsored programs * Capital gains * Damages (other than back wages) awarded in a court judgement * Dividends and interest from CDs, bank accounts, etc. * Fiduciary fees (nonprofessional) * Hobby income that is not from a trade or business * Insurance policy proceeds * IRA distributions and other retirement fund payments * Payments from annuities that are exempt from income tax * Pensions and retirement pay * Personal loans (not compensation for services) * Prize winnings from contests * Rentals from real estate (unless derived from property held by real estate dealer for sale, by a materially participating farmer, or by persons who furnish hotel-type services) Source: "1999 Social Security Explained," Avram Sacks, J.D., CCH Incorporated, Chicago, IL 60646-6085. This article first appeared in Volume 5, Issue 4 of "The Social Security and Medicare Advisor" newsletter (March/2000). To receive future editions of "The Advisor" in its special, free e-mail version, please click here. | ||||||||
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