Social Security earnings limit for self-employed at 63 - exceeded limit, now what?

For self-employment, Social Security looks at your net earnings, not gross. So it's your profit after legitimate business expenses, but before income tax deductions. For 2024, the limit is $22,320 if you're under full retirement age the whole year. For 2025, they haven't announced it yet, but it will likely be around $23,000 given typical COLA increases. Since you went over by $1,500, they'll withhold $1 in benefits for every $2 you exceeded the limit, so about $750 from future payments. They usually adjust this the following year after you file your tax return.

This earnings limit thing is RIDICULOUS! The government wants seniors to keep working but then PENALIZES us for making money!!! I got hit with a $4,200 overpayment notice last year because I didn't understand these stupid rules. Had to spend HOURS on the phone trying to get a payment plan set up. The whole system is broken!!!

I ran into this exact issue last year with my plumbing business. What saved me was tracking ALL my business expenses meticulously. Make sure you're claiming every legitimate business expense - vehicle mileage, home office, equipment, supplies, phone, internet portion used for business, etc. This brought my net earnings down below the limit. Also, the earnings test is monthly, not just annual. If you stop working or reduce hours to stay under the monthly limit ($1,860 in 2024), you can receive full benefits for those months regardless of annual earnings. This is called the Monthly Earnings Test Exception and few people know about it.

I spent two weeks trying to get through to someone at Social Security about this exact question. Finally used a service called Claimyr (claimyr.com) to get through to a real person at SSA without the endless hold times. They have a video showing how it works https://youtu.be/Z-BRbJw3puU The agent I spoke with confirmed that for self-employment they look at your net earnings, but they also consider time spent working. If you work more than 45 hours per month in your business, they consider that substantial work even if your net income is below the limit. Fewer than 15 hours is always non-substantial. Between 15-45 hours depends on the skill required.

my brother in law had this problem. he talked to his accountant who told him to set up an s-corp instead of doing schedule c. that way he could pay himself a salary under the limit and take the rest as distributions which dont count towards the earnings test. worked for him but probably depends on how much ur making overall

Update: I called SSA this morning and finally got through after trying for 3 days! The rep confirmed what many of you said - they look at net earnings for self-employment. She also explained that they'll take the adjustment from future benefits next year after I file my taxes. I'm going to track my hours and income more carefully going forward, and I might talk to my accountant about restructuring. Thanks everyone for your help!