Social Security earnings limit confusion - does 1099 income before benefit start date count toward annual limit?

Unfortunately, ALL earnings from January through December count toward the annual earnings limit - not just what you earn after your benefits start. The $22,320 limit applies to your entire 2024 income regardless of when you began receiving benefits. Based on your numbers ($18,500 + $10,000), you'll be about $6,180 over the limit. SSA will withhold $1 in benefits for every $2 you earn above the limit, so you'll likely have about $3,090 withheld from your 2025 payments. There's a monthly earnings test exception for the first year you retire, but it only helps if you've had a significant drop in earnings after you started receiving benefits. Doesn't sound like that applies in your situation since you're still actively working.

i did my own taxes first year on SS, not that different really. just another form but tax software handles it no prob. the earning limit stuff is confusing tho, i remember stressing about that too!

The SSA absolutely counts ALL your earnings for the entire calendar year toward the limit, even money earned before you filed. It's incredibly frustrating! I went through this exact situation in 2022 and got hit with a nasty surprise when they started withholding from my checks in 2023. The whole earnings test is ridiculous if you ask me - we earned these benefits but they penalize us for still being productive! At least the money isn't completely lost - you get slightly higher payments once you reach your FRA to make up for the withheld amounts.

DEFINITELY get a tax professional the first year! I thought I could handle it myself and made a mess of things. There's the taxation of benefits to figure out (up to 85% can be taxable depending on your overall income), plus estimating what you might owe for next year since you're self-employed with that 1099 income. The whole Social Security earnings test is another complication. I spent $250 on a CPA my first year and it was the best money I ever spent. She found deductions I'd have missed and helped me understand the whole system better. Now I do my own taxes again with confidence.

I had the same question when I started benefits last year. Everything I learned is that ALL earnings in the calendar year count toward the annual earnings limit ($22,320 for 2024), regardless of when you start receiving benefits. However, there's something called the "first year monthly earnings test" that might help you. In your first year of retirement, SSA can apply a monthly test instead of annual if it benefits you. Under this test, you can receive full benefits for any month you earn under $1,860 (1/12 of the annual limit) AND don't perform "substantial services" in self-employment. Definitely call SSA about this option - it could save you from some benefit withholding next year. Their phone lines are impossible though.

The earnings limit always applies to the full calendar year, not just months after starting benefits. btw the limit goes up to $59,520 in the year you reach Full Retirement Age and then disappears completely the month you hit FRA.

i messed up my first year and went over by a lot lol. they didn't tell me until like 8 months later then suddenly my checks stopped coming for 3 months!! no warning!! make sure you report your expected earnings to them so they can adjust gradually instead of all at once

To answer your question about how they handle the withholding - typically SSA will withhold full monthly payments at the beginning of the year until they've recovered the amount. So if your monthly benefit is $1,500 and they need to withhold $3,090, they might withhold your January and February payments completely, then withhold $90 from March. However, you can request a different withholding schedule if this creates a hardship. You'd need to contact SSA directly to arrange this. As for taxes, while tax software can handle the basic Social Security forms, a tax professional might be worth it the first year, especially with your 1099 contractor situation. They can help you understand the interplay between self-employment taxes, potential benefit taxation, and deductions you might be eligible for as a contractor.