Social Security earnings limit confusion - does SSA count gross wages or just SS wages on W-2?
I'm going to hit 62 next month and planning to claim SS early while still working part-time. I'm trying to stay under the 2025 earnings limit (around $22,750 I think?) but I'm confused about WHICH income number Social Security actually looks at when determining if I've earned too much. Do they look at my gross wages (Box 1 on W-2) or just the Social Security wages (Box 3)? This matters a lot for me because I have a 401k with significant pre-tax contributions that lower my Box 1 amount, plus I pay for health insurance pre-tax. The difference between Box 1 and Box 3 on my W-2 is almost $8,000! I've looked all over the SSA website but can't find a clear answer about which specific box they use when checking if I've exceeded the earnings limit. Anyone know for sure?
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Chloe Martin
SSA uses your gross earnings SUBJECT TO SOCIAL SECURITY TAX to determine if you've exceeded the earnings limit. That's Box 3 (Social Security wages) on your W-2. They look at the amount of your wages before any deductions for taxes, insurance, retirement contributions, etc. that are subject to Social Security tax. So even though your pre-tax 401k contributions and health insurance premiums reduce your taxable income (Box 1), they don't reduce the earnings that count toward the Social Security earnings limit. The 2025 limit for someone claiming before FRA is $22,680 (they adjust it annually for inflation). Going over even by $1 starts the reduction calculation.
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AstroAce
•Thank you! That's exactly what I was afraid of... so my 401k contributions don't help me stay under the limit at all? Darn it. Looks like I need to reduce my hours more than I thought.
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Diego Rojas
Just to add some details to what's already been shared - the Social Security Administration specifically uses your earnings that are subject to Social Security tax (Box 3 on W-2) for the annual earnings test. This is your gross wages before deductions for things like 401(k), health insurance, etc. For 2025, if you're under Full Retirement Age (FRA) for the entire year, the limit is $22,680. If you exceed that, SSA withholds $1 in benefits for every $2 you earn above the limit. The year you reach FRA, the limit is higher (around $60,000 for 2025), and SSA only withholds $1 for every $3 above the limit. Once you reach FRA, there's no more earnings test - you can earn unlimited amounts without affecting your benefits. Remember that any benefits withheld aren't permanently lost - they'll adjust your benefit amount when you reach FRA to account for months when benefits were withheld.
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Anastasia Sokolov
•does that mean the money they hold back you eventually get later? i thought anything they take away is just gone for good
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Diego Rojas
•Yes, that's a common misconception! When you reach your Full Retirement Age, Social Security recalculates your benefit amount to give you credit for the months when your benefits were reduced or withheld due to excess earnings. Your monthly benefit amount increases going forward to account for those previously withheld benefits. So you do eventually recover the money, but it's spread out over your remaining lifetime rather than paid as a lump sum.
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Sean O'Donnell
My sister went thru this last year. SSA definitely used Box 3 on her W2. They don't care about the other boxes AT ALL. She had to pay back like $4000 in benefits because she thought it was box 1 too!!
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AstroAce
•Oh no! That must have been a terrible surprise for her. How did she find out? Did they just send her a notice saying she owed money back?
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Sean O'Donnell
•yep, got a letter about 3 months after she filed taxes. no warning. just 'you owe us $$$'. she called and tried to explain she misunderstood but they didn't care at all.
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Zara Ahmed
I've been dealing with this exact issue for the past 2 years. SSA absolutely uses Box 3 (Social Security wages) to determine if you exceed the earnings limit. If you'll be 62 next month, I'm assuming your Full Retirement Age is probably around 67? So you'd have to stay under the limit for 5 years, which can be challenging. Have you considered whether it might be better to just wait until FRA to claim? The benefit amount will be significantly higher. One strategy I've found helpful: if you know you're going to exceed the earnings limit, you can contact SSA in advance and ask them to withhold benefits preemptively so you don't end up with an overpayment situation. Much better than getting a surprise bill!
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AstroAce
•That's a good idea about asking them to withhold preemptively. I've been debating whether to claim early or wait. My FRA is 67, but I have some health concerns that make me lean toward claiming early. Family history suggests I might not make it much past 75, so waiting until 67 or 70 might not be the best for my situation. Hard decisions!
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Zara Ahmed
•I completely understand - the health factor definitely changes the calculation. In that case, you might want to get on SS now while managing your work income carefully. I'd recommend setting up a my Social Security account online at ssa.gov if you haven't already. It lets you see your earnings record and estimate your benefits. Super helpful for planning!
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StarStrider
SORRY BUT YOURE ALL WRONG!!! Social Security looks at your GROSS TOTAL INCOME before ANY deductions!! That means Box 5 Medicare wages which is HIGHER than Box 3!!! This happened to my husband and they took back almost all his benefits for 6 months!!! They count EVERYTHING you earn!
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Chloe Martin
•That's not accurate. Social Security specifically uses earnings subject to Social Security tax (Box 3) for the earnings test, not Medicare wages (Box 5). The two amounts are often different because Medicare tax applies to all earnings while Social Security tax has an annual cap ($168,600 in 2025). If your husband had an overpayment, it was either because his Box 3 amount exceeded the limit, or there was some other issue involved. You can verify this information directly on SSA's website or by calling them.
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StarStrider
•Well SOMEONE at Social Security is confused then because they DEFINITELY used his Medicare wages when they calculated his overpayment!!! Maybe the rules changed???
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Zara Ahmed
•The rules haven't changed - it's always been Box 3 (Social Security wages). But the people administering the rules sometimes make mistakes. If you think they calculated your husband's overpayment incorrectly, you can request a reconsideration. It might be worth checking if there was some confusion about which income was being counted.
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Luca Esposito
After spending WEEKS trying to get through to Social Security about this exact question last year, I discovered Claimyr (claimyr.com). Their service got me connected to a real SSA agent in under 10 minutes when I'd been trying for days. The agent confirmed it's definitely Box 3 (Social Security wages) they look at for the earnings limit. If you need definitive answers about your specific situation, check out their demo video: https://youtu.be/Z-BRbJw3puU. Totally worth it when you're trying to make important retirement decisions and can't get through on the regular SSA phone lines.
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AstroAce
•Thanks for the recommendation! I've been trying to get through to SSA for days with no luck. I'll check out that service - I really need to get this figured out before I submit my application next month.
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Anastasia Sokolov
Box 3!!!! but what counts as earnings anyway? does rental income count? what about if i sell stuff on ebay?
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Diego Rojas
•Good question! For the earnings test, SSA only counts earned income - wages from a job (Box 3 on W-2) or net earnings from self-employment. They don't count unearned income like rental income, investments, interest, pensions, or annuities. Regarding eBay: If you're just occasionally selling personal items, that's generally not counted. But if you're running a business buying and selling items for profit, that would count as self-employment income. For self-employment, it's your net profit (after business expenses) that counts toward the limit.
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AstroAce
Thanks everyone for the responses! I called SSA using that Claimyr service someone mentioned (got through in 7 minutes!) and confirmed it IS Box 3 they look at. The agent was super helpful and explained I should be looking at my paystubs throughout the year to track my running total of SS wages to make sure I stay under the limit. I also asked about what happens if I go over, and she explained they withhold benefits at a rate of $1 for every $2 over the limit, starting from January of the following year. So if I accidentally go over, I won't immediately lose benefits, but might have some months without payments next year. Thanks again for all the help! I'll be watching my earnings very carefully now.
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