Social Security earnings limit confusion - why does SSA need my monthly work hours as self-employed?

They're asking about hours because they need to determine if you're truly "retired" or still working substantially. For self-employed people, SSA looks at both earnings AND time spent working to determine if you're really retired. This is different from W-2 employees where they only look at earnings. Basically, they use a "services test" for self-employed individuals that considers how many hours you're putting into your business. If you're working more than 45 hours per month in your business, they might determine you're not actually retired regardless of how much income you report. Keep good records of both your earnings AND hours worked each month. The monthly breakdown is important because during your first year of benefits, they use the monthly earnings test rather than the annual one.

Ugh the SS system is SO UNFAIR to self-employed people!! I went through this EXACT same thing last year. They scrutinize us WAY MORE than regular employees - we pay double FICA taxes our whole working lives and then get treated like potential frauds when we try to collect benefits! They made me document EVERYTHING about my pet sitting business - hours, earnings, client details. I even had an agent tell me that working over 45 hours would trigger a review REGARDLESS of earnings. Meanwhile my neighbor works part-time at Walmart and just has to stay under the earnings limit!

To clarify what others have said, the SSA applies two tests to self-employed individuals: the income test (the $1,960/month limit you mentioned) AND a services test. The services test looks at whether you're performing "substantial services" in your business. For self-employment, working more than 45 hours per month is always considered substantial services. Working between 15-45 hours may be considered substantial depending on other factors like skill required, management responsibilities, etc. This is because self-employed individuals have more control over how they report income and could potentially defer income or manipulate earnings while still working substantially. The rules are in §404.446 and §404.447 of SSA regulations if you want to read the details. So yes, it does matter how many hours you work, even if your earnings are under the limit.

my brother in law is a plumber and went thru this. he just put down 40 hours every month on the form and kept his income under the limit and never had any problems. i dont think they actually check the hours unless they audit you or something

I went through this exact situation three years ago when I started receiving benefits while continuing my consulting business. You definitely need to track both hours and income carefully. Have you tried contacting SSA directly to get their guidance on your specific situation? I spent weeks trying to get through on their 800 number and kept getting disconnected after waiting for hours. It was beyond frustrating.

i retired 2 years ago but still do hair for a few long time clients. just do cash and dont report it lol thats what everyone i know does

Thanks everyone for the helpful insights! I had no idea the rules were different for self-employed people. I've decided to limit myself to 40 hours per month maximum and will keep very detailed records of both my hours and income. I'm going to create a spreadsheet to track everything daily so I can stay under both limits. I'm also going to try contacting SSA directly to get their official guidance on my specific situation. I really appreciate all the advice!

My sister went through this with her Etsy shop. The monthly breakdown is super important because if you exceed the limit in ANY month during that first year, they can withhold benefits for that specific month. After your first year on benefits, they switch to the annual limit instead of monthly which gives you more flexibility throughout the year.