Income for Social Security eligibility

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills.
Post Reply
Topic Author
plnelson
Posts: 720
Joined: Wed Feb 24, 2010 5:49 pm

Income for Social Security eligibility

Post by plnelson »

I'm 64 and winding down into retirement. My wife died in 2012 and I'm eligible for income under her benefits. I won't be taking SS income under my own Social Security benefits until 70. I have a consultancy (an LLC) and October is my last full month of work. In November or December I promised to make myself available to one client to do odd jobs such as interviewing new candidates or fixing small software bugs.

The Social Security representative I spoke with said I could earn up to $1410 a month for a mid-year retirement like this. This is echoed in this SS document: https://www.ssa.gov/planners/retire/rule.html

My question is what, exactly, counts as income?

If I do work in November and invoice the client in November do I have to receive the check in November for it to be November income? If I receive the check in November and deposit it to my LLC (business) account in November, but don't transfer it to my personal account until December, which month is that applied to? Alternatively, if I do more than $1410 worth of work in November, can I have the client issue one check in November and another in December to keep the total in any one month below $1410.

Also, does unearned income such as interest affect the $1410 number?

Thanks in advance.
User avatar
Electron
Posts: 2658
Joined: Sat Mar 10, 2007 7:46 pm

Re: Income for Social Security eligibility

Post by Electron »

plnelson wrote: Fri Oct 27, 2017 11:06 am My question is what, exactly, counts as income?
This link may help answer the question.

https://faq.ssa.gov/link/portal/34011/3 ... t-benefits
Enjoying the Outdoors
User avatar
PaddyMac
Posts: 1808
Joined: Fri Jul 09, 2010 10:29 pm

Re: Income for Social Security eligibility

Post by PaddyMac »

If I do work in November and invoice the client in November do I have to receive the check in November for it to be November income?
Do you run your accounts as "Cash" or "Accrual" ? This should be marked on your last year's taxes as you can only do your books one way or the other.

With CASH, the taxable income is received then you get paid.
With ACCRUAL, the income is taxable per the date of the invoice.

Because Sales Tax in California insisted I have Accrual books, I've always worked that way. But the default for small businesses is usually cash. You can switch from Cash to Accrual but you need to note it on your book keeping and I believe my CPA told me I can't switch back (or can't keep switching back and forth, something like that).

Answering Cash vs. Accrual should answer every other question I think.
Cruise
Posts: 2750
Joined: Mon Nov 21, 2016 6:17 pm

Re: Income for Social Security eligibility

Post by Cruise »

plnelson wrote: Fri Oct 27, 2017 11:06 am I'm 64 and winding down into retirement. My wife died in 2012 and I'm eligible for income under her benefits. I won't be taking SS income under my own Social Security benefits until 70. I have a consultancy (an LLC) and October is my last full month of work. In November or December I promised to make myself available to one client to do odd jobs such as interviewing new candidates or fixing small software bugs.

The Social Security representative I spoke with said I could earn up to $1410 a month for a mid-year retirement like this. This is echoed in this SS document: https://www.ssa.gov/planners/retire/rule.html

My question is what, exactly, counts as income?

If I do work in November and invoice the client in November do I have to receive the check in November for it to be November income? If I receive the check in November and deposit it to my LLC (business) account in November, but don't transfer it to my personal account until December, which month is that applied to? Alternatively, if I do more than $1410 worth of work in November, can I have the client issue one check in November and another in December to keep the total in any one month below $1410.

Also, does unearned income such as interest affect the $1410 number?

Thanks in advance.
The income limit is per year, not per month. If you are concerned about having too much income for the year, and you use cash accounting, no reason why you can't bill late in year 1 so that your income is received in the following year 2.
Topic Author
plnelson
Posts: 720
Joined: Wed Feb 24, 2010 5:49 pm

Re: Income for Social Security eligibility

Post by plnelson »

Cruise wrote: Fri Oct 27, 2017 4:47 pm
The income limit is per year, not per month. If you are concerned about having too much income for the year, and you use cash accounting, no reason why you can't bill late in year 1 so that your income is received in the following year 2.
Nope, read the link from Social Security I provided in the OP. "Some people who retire in mid-year have already earned more than their yearly earnings limit. That is why we have a special rule that applies to earnings for one year, usually the first year of retirement."
...
"be under full retirement age for all of 2017, you are considered retired in any month that your earnings are $1,410 or less and you did not perform substantial services in self employment."

I'm covered under that because my retirement begins at the end of this month.
Post Reply