Understanding SSI -- SSI Spotlight on Reporting Your Earnings to Social Security (2024)

FAQs

What income is included in your Social Security record? ›

Only earned income, your wages, or net income from self-employment is covered by Social Security. If money was withheld from your wages for “Social Security” or “FICA,” your wages are covered by Social Security.

SSA receives information on employee wages from the employer on Form W-2 Wage and Tax Statement and Form W-3 Transmittal of Wage and Tax Statements, and on self-employment earnings from IRS data files derived from Schedule SE and the unreported wages and tips line item on Form 1040, U.S. Individual Income Tax Return.

We: Base Social Security benefits on your lifetime earnings. Adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received. Calculate your average indexed monthly earnings during the 35 years in which you earned the most.

When we figure out how much to deduct from your benefits, we count only the wages you make from your job or your net earnings if you're self-employed. We include bonuses, commissions, and vacation pay.

Unearned income we do not count. (a) General. While we must know the source and amount of all of your unearned income for SSI, we do not count all of it to determine your eligibility and benefit amount. We first exclude income as authorized by other Federal laws (see paragraph (b) of this section).

Generally, things that don't count toward your income limit include: State SSI supplement payments. Supplemental Nutrition Assistance Program (SNAP) benefits (food stamps) Section 8 housing vouchers.

Each year we review the records for all Social Security beneficiaries who work. If your latest year of earnings turns out to be 1 of your highest years, we refigure your benefit and pay you any increase due. This is an automatic process, and benefits are paid in December of the following year.

You must have worked and paid Social Security taxes in five of the last 10 years. If you also get a pension from a job where you didn't pay Social Security taxes (e.g., a civil service or teacher's pension), your Social Security benefit might be reduced.

Social Security income can be taxable no matter how old you are. It all depends on whether your total combined income exceeds a certain level set for your filing status. You may have heard that Social Security income is not taxed after age 70; this is false.

There is a special rule that applies to earnings for 1 year, usually the first year of retirement. Under this rule, you can get a full Social Security benefit for any whole month you are retired and earnings are below the monthly limit.

Is Social Security based on gross income or taxable income? ›

When reporting your wages, Social Security requires that you report your gross income — the amount you've earned before any deductions were taken from your paycheck.

(We deduct $1 from benefits for each $2 earned over $22,320.) The earnings limit for people reaching their “full” retirement age in 2024 will increase to $59,520.

Nontaxable income won't be taxed, whether or not you enter it on your tax return. The following items are deemed nontaxable by the IRS: Inheritances, gifts and bequests. Cash rebates on items you purchase from a retailer, manufacturer or dealer.

It also includes personal information (name, date of birth, sex, date of death, date of filing, relationship to the SSN holder, entitlement to benefits on another SSN, benefit amount, and payment status) and, if applicable, information about a representative payee, disability entitlement, workers' compensation offset ...

Nontaxable employee pay, such as certain dependent care benefits and adoption benefits, is not earned income.

An SSN is used to track an individual's yearly earnings and the number of years they've worked.