Social Security earnings limit confusion with eBay self-employment income - how to report monthly?

Yep, had the same issue with my Amazon selling business. SSA looks at the NET earnings from self-employment (after expenses) divided by the months you worked. So if u worked all year, they divide by 12 even if some months were way more profitable than others. Keep REALLY good records of your hours worked each month - I learned this the hard way when they asked me to prove I wasn't working too many hours in certain months!

Self-employment income and Social Security's earnings test is often misunderstood. Here's how it works: 1. For retirement benefits before Full Retirement Age (FRA), SSA applies the earnings test to your net earnings from self-employment (profit after business expenses). 2. For the annual earnings test, they divide your yearly self-employment income by the number of months you performed "substantial services" in your business. This doesn't necessarily mean every month you had sales. 3. The monthly earnings test only applies for the first year you claim benefits. After that first year, only the annual test matters. 4. For determining "substantial services" in self-employment, SSA considers: - Hours worked (over 45 hours/month is always substantial; 15-45 depends on skill required) - Nature of services provided - How comparable your work is to what you did before retirement SSA Publication No. 05-10069 explains this in detail. You should keep a monthly log of hours worked and business activities to document your involvement.

I just wanna say SS is a NIGHTMARE with self-employment!!! I had my benefits reduced last year bcuz they said I worked too much in my Etsy shop even tho I made less than the limit overall. Make sure u document EVERYTHING and good luck dealing with them!!

You're right to be concerned about this. The SSA doesn't automatically know your monthly earnings - they typically find out when your tax return is processed. If you exceed the annual limit, they'll calculate an overpayment. For the monthly test (which only applies in your first year on benefits), you need to be proactive. Here's what I recommend: 1. Track your monthly net earnings (income minus expenses) and hours worked 2. Contact your local SSA office if you have a month that exceeds the monthly limit ($1,860 for 2025) 3. Consider using the SSA's voluntary reporting form (SSA-131) for months you exceed the limit Most importantly, remember that only the months you perform "substantial services" count. So if you spend minimal time (under 15 hours) on your business in some months, those months might not even count against you regardless of sales.

I went through this exact situation when I started my SS at 63 while running my online collectibles business. Trying to call Social Security to get clear answers was impossible - I spent DAYS on hold only to get disconnected or told different things by different reps. I finally used a service called Claimyr (claimyr.com) that got me connected to a real SSA agent in about 20 minutes instead of waiting for hours. The agent walked me through exactly how to document my self-employment activity and explained the substantial services rules. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU After that call, I learned I needed to keep a simple log of hours worked per month and note my business activities. SSA actually cares more about your work activity than the fluctuating income in self-employment cases.

One more thing i forgot to mention - when I talked to SSA they said that my eBay business counts as an "ongoing business" so i'm considerd to be providing services every month even if i don't make a sale that month. Its not like a job where u can just say "I didn't work these months" if ur still maintaining the business presence. just something to think about

Update: I called my local SS office (finally got through after trying different times of day) and got some clarification. The rep said I should: 1. Keep a simple monthly log of hours spent on eBay business activities 2. Track both my gross sales and estimated expenses by month 3. Use the SSA-131 form to report any months where I either work more than 45 hours OR make net profit above the monthly limit ($1,860) She said after my first year on benefits, they'll only look at my annual total from Schedule C, but for this first year, they look at it month by month. Thanks everyone for your help!

Im in the same boat with my Poshmark business and what I do is guesstimate my hours each week and write them down in a planner. For income I just download the monthly sales report and subtract fees+shipping costs+cost of items. It's not perfect but my tax guy said it should be fine if SSA ever questions me. The whole system is so confusing though!!!!

Just wanted to add my experience as someone who's been dealing with this for 3 years now. The key thing that saved me a lot of headaches was setting up a simple spreadsheet where I track: - Date and hours worked each day (even if just 30 minutes answering messages) - Monthly totals for hours - Monthly gross sales - Monthly expenses (shipping supplies, listing fees, etc.) - Monthly net profit I also take screenshots of my seller dashboard at the end of each month showing total sales. This way if SSA ever asks questions, I have everything documented. The "substantial services" rule is tricky - even if you only work 10 hours in a month but you're actively managing listings, responding to customers, and shipping orders, they might still consider it substantial. Better to over-document than under-document! Also, don't forget that business expenses like your home office space, mileage to buy inventory, and even a portion of your internet bill can reduce your net earnings. Work with a tax professional if you can - it's worth it to make sure you're maximizing deductions legally.

I'm new to this community but dealing with the exact same situation! Just turned 62 and thinking about filing for SS soon while running my small online business. Reading through all these responses has been super eye-opening - I had no idea about the "substantial services" rule or that they look at it month by month in your first year. The spreadsheet tracking idea from Connor sounds like a lifesaver. I've been so focused on just the annual earnings limit that I completely overlooked the monthly requirements. It sounds like even small activities like responding to customer messages or updating listings could count toward those hours. Has anyone here had to actually deal with an overpayment situation? I'm wondering how strict SSA really is about enforcing these rules or if they're more understanding with genuine mistakes from people who are trying to comply. Also, for those using the SSA-131 form - do you submit it proactively every month, or only when you think you might have exceeded the limits? I'm trying to figure out the best approach to stay compliant from day one rather than having to fix problems later.

Welcome Ben! I've been dealing with this situation for about 6 months now and can share some real experience. Regarding overpayments - yes, SSA is pretty strict about enforcing these rules, but they're generally reasonable if you show good faith effort to comply and report issues promptly. I had a month where I accidentally went over the monthly limit and didn't realize it until tax time. When I contacted SSA proactively to report it, they worked out a repayment plan rather than demanding a lump sum. The key was that I reached out to them first instead of waiting for them to discover it. For the SSA-131 form, I only submit it when I think I might be close to or over the limits. Most months I'm well under both the hours and income thresholds, so there's no need to file. But if I have a particularly busy month with lots of sales or spend extra time on a big inventory purchase, I'll file the form to be safe. One thing that really helped me was calling my local SSA office and asking them to walk me through a few example months based on my actual business activity. They were surprisingly helpful and it gave me confidence about what to track and when to be concerned. The bottom line is documentation is everything - keep detailed records and err on the side of over-reporting rather than under-reporting. Good luck with your filing!

As someone who just went through this exact situation last year, I can't stress enough how important it is to start documenting everything from day one. I wish I had found this thread when I was starting out! One thing I learned the hard way is that SSA considers "passive" activities like having active listings as part of your business operations, even if you're not actively working that day. So if you have 50 items listed and they're just sitting there generating potential sales inquiries, SSA might still count that as business activity. My advice based on actual experience: 1. Create a simple daily log - even if you just spend 10 minutes checking messages, write it down 2. Save all your platform reports (eBay seller hub, PayPal statements, etc.) at month-end 3. Don't panic about small variations - they're looking for patterns of substantial work, not nitpicking every minute The good news is that after your first year, it gets much simpler since they only look at annual totals. Just survive that first year with good documentation and you'll be fine. The learning curve is steep but manageable if you stay organized from the start. Anyone else find that different SSA reps gave them conflicting information? I got three different answers about the same question until I finally got it in writing.

I've been following this thread with great interest as I'm considering early retirement at 62 next year while continuing my small Amazon FBA business. The amount of detailed, real-world advice here is incredible - thank you all for sharing your experiences! A few questions for those who've been through this: 1. For inventory purchases - do you count the time spent researching and buying inventory as "work hours"? I sometimes spend weekend afternoons at garage sales or estate sales looking for items to flip, and I'm not sure if that counts toward the monthly hour limits. 2. Has anyone dealt with seasonal variations? My business is heavily Christmas-focused, so I might work 60+ hours in October-December but only 10-15 hours per month in the summer. I'm wondering how SSA handles that kind of fluctuation in the first year. 3. For those using spreadsheets to track everything - do you also photograph/scan receipts for all business expenses? I'm trying to figure out how detailed my documentation needs to be. The conflicting information issue that several people mentioned is concerning. It sounds like getting consistent guidance from SSA is almost impossible, which makes me want to be extra conservative with my record-keeping and reporting. Really appreciate this community for discussing these real-world challenges that the official SSA publications don't fully address!