I started collecting SS in Jan 2018. I turned 66 in November 2018. I went over the earnings limit.. SS sent me a letter stating they would recover the overpayment. In the letter it stated that some of my 2018 income is not counted if the income I received was earned in 2017. Income such as vacation, sick pay, bonuses, and possibly profit sharing. I had my company’s payroll department fill out SSA form 131 and I brought I into the SS office. They told me that since I’m still working I can’t deduct this income. Nowhere in the letter SS sent me does it say that. They also said that the 131 form wasn’t specific enough, that each type of income should have a dollar value, not just one total figure. The form doesn’t ask for a breakdown! Where do I stand here? Is this non earned income able to be deducted? Thanks

Hi,

The types of payments you refer to are not unearned, the question is when they should be counted as having been earned. Vacation and sick pay are normally considered to have been earned in the period of absence. Bonuses and profit sharing are typically considered to have been earned when paid unless they're a regular part of the worker's salary (https://secure.ssa.gov/apps10/poms.nsf/lnx/0302505030).

What you were told at the Social Security office sounds basically correct. The only time that vacation an sick pay is normally excludable from counting for earnings test purposes is when the vacation or sick pay is paid in a lump sum at the time the employee retires.

I don't have enough details to be able to tell you whether or not any of your earnings could be excluded as special wage payments, but since you reached full retirement age (FRA) in November 2018 your earnings for November and December 2018 would definitely not count for earnings test purposes. Assuming that you worked for wages, your countable earnings for 2018 would be limited to the amount that you earned from January 1st to October 31st of 2018.

Best, Jerry