Dear Jerry,
Thanks for answering the question “Is My Math Accurate?” I looked up the SS link you suggested regarding withholding benefits when earnings exceed the limit for someone who files early for SS. You wrote: “both your husband's benefits and your spousal benefits would be withheld for as long as it takes to recover the amount required by the Social Security earnings test.” I could be wrong, but I believe the Social Security office told me (by phone) that because I am of FRA, my benefits would NOT be withheld-, although they might revert to my own $1053/mo vs the $1079/mo I’d get as a spouse.

--The SS link also says, regarding early retirement/excessive earnings: “after you reach full retirement age, we will recalculate your benefit amount to give you credit for any months in which you did not receive a benefit because of your earnings.” If my spousal benefits are indeed withheld because of my husband’s excess earnings, will I also get credit for any months in which I didn’t receive a benefit?

--The same link states that in figuring how much to deduct from benefits for excessive earnings, SS counts “only the wages you make from your job or your net profit if you're self-employed.” We are both self-employed, but what exactly does “net profit” refer to? Our adjusted gross income in our (joint) income tax return? The “Net Profit” on Line 31 of Schedule C Form 1040? In the annual Social Security letter sent out, my husband has a figure for his “Taxed Social Security Earnings” for 2015 that I can’t find anywhere in our 2015 returns.

Thank you.

Hi,

You said previously that you are thinking of filing for spousal benefits only at full retirement age (FRA). If you do that, your spousal benefits would be subject to withholding if your husband is under FRA and has excess earnings even if you are over FRA. In that event, Social Security would not pay you your retirement benefit rate instead because you won't have filed for benefits on your own record.

To illustrate, say that you did file for both your retirement benefits and spousal benefits at FRA. Based on your figures, Social Security would then pay you $1053 from your record and $26 from your husband's record for a total of $1079. That would likely be a bad strategy overall, but in that case only the $26 spousal benefit would be subject to withholding based on your husband's excess earnings. But, you would then not accrue delayed retirement credits on your own record, which is the whole point of filing for spousal benefits only at FRA.

Your spousal benefit rate would not increase as a result of your spousal benefits being withheld after FRA due to your husband's earnings. Spousal benefits do not accrue delayed retirement credits and can never exceed 50% of your spouse's full retirement age rate (PIA).

Countable self-employment earnings for purposes of the earnings test are your net earnings subject to self-employment taxes. That figure can be found on line 4 of Schedule SE of the 2016 tax returns. And, just to clarify, there is no limit on your earnings once you reach FRA.

I hope that you will take my previous suggestion to use the maximization software available on this website in order to determine the best filing strategy for you and your husband. If your husband was born prior to January 2 1954, it may be better for you to file on your own record instead of having your husband file for reduced benefits to allow you to receive spousal benefits. That way, your husband could file for spousal benefits only at FRA and allow his own rate to grow until age 70. That strategy would also potentially provide you with higher widow's benefits if your husband dies before you. That's just another of many possible strategies to consider. The maximization software can help you determine what's best.

Best, Jerry