Confused about Social Security earnings limits - vacation pay pushed me over monthly limit for survivor benefits
I'm really struggling to understand the Social Security earnings test rules since my situation changed recently. I started receiving widow's survivor benefits in January 2025 (I'm 63), and I've been careful to stay under the monthly earnings limit of $2,520. My full-time accounting job downsized in March, and I found part-time work at a small business to supplement my income. Here's where I'm confused - this month, my former employer paid out my unused vacation time ($1,850), which when combined with my part-time earnings puts me OVER the monthly limit. I've read something about monthly limits only applying in your first year of benefits? Does that mean I only need to worry about the annual limit of $30,240 going forward? Or do I still need to track monthly? Will Social Security penalize me for this one-time vacation payout? I'm trying so hard to follow the rules but it's confusing with these special payments. Any advice would be greatly appreciated!
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Ella Russell
The monthly earnings test only applies in the first calendar year that you receive benefits. Since you started collecting survivor benefits in January 2025, and we're still in 2025, you DO need to be concerned with monthly limits right now. However, here's the good news - according to SSA rules, vacation pay is counted when it was EARNED, not when it was PAID. Since you earned that vacation time at your previous job before you started collecting benefits, it shouldn't count toward your earnings limit at all! Make sure to keep documentation showing when that vacation time was accrued. If SS questions it, you can explain it was earned before you began receiving benefits.
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Aaliyah Reed
•Oh thank you so much! That's a relief about the vacation pay. So just to be clear - I still need to stay under $2,520 each month for the rest of 2025, and then in 2026 I only need to worry about the annual limit? Is that right?
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Mohammed Khan
my sister went thru this last yr. they only care about the yearly total not monthly!!! she went over 1 month and nothing happened. don't stress
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Gavin King
•This is incorrect information and could cause the original poster problems. When you first start receiving benefits, the monthly earnings test DOES apply for the remainder of that calendar year. In subsequent years, only the annual limit matters. Please be careful about giving advice when you're not certain of the facts.
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Nathan Kim
The SSA rules about working while receiving benefits are SO CONFUSING and they don't make it easy to understand!!! I went through something similar with my retirement benefits and kept getting different answers every time I called. Based on my experience, you should definitely report the income accurately regardless, because if you don't and they find out later (which they WILL when tax forms are filed), you'll end up with an overpayment notice and that's a NIGHTMARE to resolve. Keep detailed records of everything - when you worked, when you were paid, what the money was for. The SSA employees are overworked and often make mistakes!
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Aaliyah Reed
•Thank you for the advice about keeping good records. I've started a spreadsheet tracking everything. Did you have any luck getting through to them on the phone? I've tried calling three times but couldn't get past the automated system.
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Eleanor Foster
i had this exact problem!!!! your vacation pay doesn't count toward the limit if you earned it BEFORE you started getting SS benefits. you need to talk to someone at SSA tho to make sure they know this was vacation time from your old job
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Lucas Turner
•I had to deal with this situation too, and it took months to straighten out because SSA initially counted my severance pay incorrectly. I finally was able to reach someone at SSA using Claimyr (claimyr.com). They got me connected to a real person at SSA in under 20 minutes when I'd been trying for weeks. You can see how it works in their video demo: https://youtu.be/Z-BRbJw3puU It saved me a lot of stress since I needed to get this resolved before they reduced my next payment. The agent was able to document in my file that the vacation payout shouldn't count toward my earnings limit.
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Gavin King
To clarify some of the confusion here: 1. Monthly earnings test applies ONLY in the first calendar year you receive benefits. Since you started in January 2025, the monthly test applies all year. 2. Starting January 2026, only the annual limit will matter. 3. Special payments (like vacation pay, severance, bonuses, etc.) that were earned BEFORE you started collecting benefits don't count toward the earnings limit. The SSA has a specific form (SSA-131) for reporting these special payments. 4. You should contact SSA to clarify how your vacation payout will be treated. Bring documentation showing when the vacation time was earned. 5. Keep in mind the earnings limit increases slightly each year with COLA adjustments. Don't rely on what happened with someone else's situation - the rules are applied differently based on specific circumstances.
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Mohammed Khan
•whatever man, they never even checked my sisters monthly earnings i know this for a fact!!! the computer only catches yearly totals
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Kai Rivera
I was just thinking about this the other day! My husband retired last year and we went through all this confusion too. Our accountant told us that vacation pay is considered a "special payment" and there's actually a form you can submit to Social Security to let them know about it. I think it's called Special Wage Payment form or something like that. Anyway, my husband ended up going back to work part-time too and it's been fine as long as we stay under the annual limit. Good luck with everything!
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Gavin King
•You're right - it's Form SSA-131 (Employer Report of Special Wage Payments). This is exactly what the OP should use to make sure the vacation payout is properly categorized.
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Aaliyah Reed
Thank you all for the helpful advice! I'm going to: 1. Gather documentation about when my vacation time was earned 2. Fill out that SSA-131 form to report it as a special payment 3. Try using Claimyr to actually reach someone at SSA (thanks for that tip!) 4. Continue tracking my monthly earnings carefully for the rest of 2025 It's such a relief to know the vacation pay likely won't count against me. This community has been more helpful than hours of reading the SSA website!
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