Do Social Security earnings limits count farm income differently before FRA? IRMAA implications for selling livestock

Farm income absolutely counts toward the Social Security earnings test limit, but it's calculated differently than W-2 wages. For self-employment income (which is what your non-incorporated farm falls under), SSA looks at your net earnings from self-employment - that's your profit after deducting legitimate business expenses. For the 2025 earnings limit of $22,320, they would combine his hardware store W-2 income ($22,000) plus the net profit from the farm (not gross sales). So if your livestock sales are $35,000 but you have $25,000 in deductible farm expenses, only $10,000 would count toward the earnings limit. For IRMAA purposes, Medicare uses your Modified Adjusted Gross Income (MAGI) from two years prior. So when he turns 65, they'll look at his tax return from when he was 63. And yes, net farm income is definitely included in those calculations.

Ive been in this exact situation!!! The farm income is totaly confusing with SS. We raise cattle in Nebraska and I started SS at 62 and SS counted ALL my farm income against the limit and I lost almost half my benefits the first year!!! They dont tell you this stuff until its too late!!!! You need to be SUPER careful and maybe wait till hes at full retirement age when theres NO earnings limits. Thats what I should of done.

The previous responses are mostly correct, but to add some precision: the Social Security Administration counts farm income following IRS Schedule F reporting. They look at Line 34 (Net farm profit or loss) from that form when determining if you've exceeded the earnings limit. For your father's situation, there are strategic considerations: 1. If the combined hardware store wages ($22,000) and net farm profit will consistently exceed the annual limit ($22,320 for 2025), he might want to postpone filing until he reaches his Full Retirement Age. 2. For IRMAA, the calculations are based on Modified Adjusted Gross Income from his tax return. Both the W-2 income and net farm income are included, but capital gains from selling breeding livestock held over 24 months might be calculated differently. 3. If your father plans to continue this income pattern, he should be aware that benefits reduction isn't actually "lost" - SSA recalculates and increases his benefit amount after he reaches Full Retirement Age to account for months when benefits were withheld.

My sister claims SS and has a small farm too, but I think you're overthinking this. It's just income like anything else. They don't care if it comes from selling pigs or working at walmart. if you make too much they take some benefits away until FRA.

I had the WORST time trying to get this exact question answered when I was helping my dad figure out his SS benefits with his small farm income! I called the SSA literally 18 times over two weeks and either got disconnected or waited for hours. Finally I found this service called Claimyr (claimyr.com) that got me connected to an actual SSA representative in under 20 minutes. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU The SSA rep explained that for farmers, they look at the NET income after all legitimate business expenses are deducted. So your dad should carefully track and document all farm-related expenses to minimize the impact on his benefits. Also, the SSA rep mentioned that IRMAA thresholds are much higher than the earnings limit thresholds, so your dad might exceed the earnings limit but still stay below IRMAA surcharges.

isnt there a way to like incorporate the farm so the income doesnt count?? my uncle did something with his fishing boat business when he started getting ss checks

Everyone's giving good advice about the earnings test, but I want to address your IRMAA question more specifically. IRMAA (Income-Related Monthly Adjustment Amount) is the Medicare premium surcharge based on your income from 2 years ago. For 2025, the first IRMAA tier starts at $103,000 for individuals. So unless your father's MAGI (Modified Adjusted Gross Income) from 2023 was above that threshold, he won't pay any IRMAA surcharges when he enrolls in Medicare at 65. The critical difference between IRMAA and the earnings test is that IRMAA looks at ALL income - wages, farm profits, capital gains, dividends, interest, rental income, etc. - while the earnings test only counts earned income (wages and self-employment net profit). Also worth noting that if your farm has a particularly good year that pushes him into IRMAA territory, but then income drops the next year, he can file Form SSA-44 for a reduction due to a life-changing event.

One more thing no one mentioned!! If your selling breeding livestock there different tax rules that might help! We sold some breeding cows we had for years and our accountant said that was capital gains not regular income! Check with your tax person on this!!

This is such a common issue for farmers dealing with Social Security! I went through something similar with my own farm operation a few years back. One thing that really helped me was keeping detailed monthly records of farm expenses throughout the year, not just at tax time. Since your dad's livestock sales are seasonal (once or twice a year), you might want to consider the timing of those sales strategically. If he's right at the earnings limit threshold, maybe spreading sales across different tax years could help manage both the SS earnings test and potential IRMAA implications down the road. Also, don't forget about potential deductions like equipment depreciation, feed costs, veterinary expenses, and even mileage for farm-related trips. These can significantly reduce that net farm profit number that SSA uses for the earnings test calculation. The folks here have given you great advice - definitely track everything meticulously and consider waiting until FRA if the combined income will consistently exceed the limits. Those "lost" benefits do get recalculated later, but cash flow in the early retirement years is often more important than theoretical future adjustments.

As someone who's helped several farming families navigate this exact situation, I'd strongly recommend your dad consult with both a tax professional familiar with agricultural income AND contact Social Security directly before making any decisions. The key issue is that farm income timing can be unpredictable - what looks like staying under the earnings limit one year could easily exceed it the next if livestock prices spike or you have an unexpectedly profitable sale. One strategy worth considering: if your dad is healthy and can afford to wait, delaying Social Security until his Full Retirement Age (67 for someone born in 1962) eliminates the earnings test entirely. Plus, he'd get delayed retirement credits if he waits even longer, increasing his monthly benefit permanently. For the immediate question though - yes, net farm profit absolutely counts toward the $22,320 limit, and with his hardware store income already at $22,000, there's very little room for farm profit without triggering benefit reductions. Also keep detailed records of ALL farm expenses (feed, fuel, equipment repairs, veterinary bills, etc.) since these directly reduce the net profit that counts toward the earnings test. Many farmers miss legitimate deductions that could keep them under the threshold.

I work as a benefits counselor and see this scenario frequently with farming families. A few additional considerations that haven't been mentioned yet: First, your father should be aware that the Social Security earnings test is calculated on an annual basis, not monthly. So even if his hardware store job puts him close to the $22,320 limit, a large livestock sale in one month won't immediately trigger benefit suspension - SSA looks at the total for the entire year. Second, there's something called the "monthly earnings test" that applies in the first year of receiving benefits. In 2025, if he claims benefits mid-year, any month where he earns less than $1,860 ($22,320 ÷ 12), he can receive his full benefit for that month regardless of his annual total. This could be strategically useful if he times his claim around seasonal farm income patterns. Third, I'd recommend having him request his Social Security Statement online at ssa.gov to see exactly what his projected benefits would be at different claiming ages. Sometimes the difference between claiming at 63 versus waiting until Full Retirement Age is significant enough to make waiting worthwhile, especially if earnings test reductions would substantially reduce early benefits. The good news is that any benefits "lost" to the earnings test aren't truly lost - they're recalculated and added back to his monthly benefit amount starting at Full Retirement Age. But cash flow during those early retirement years matters too.