Social Security earnings limit question - is the $23k at FRA gross or net income?

It's your gross earnings that count toward the annual earnings limit. The $23,920 limit for 2025 (for those under FRA the entire year) applies to your wages or net self-employment income BEFORE taxes are taken out. If you're self-employed as a consultant, it would be your net profit from the business, but before income taxes. Make sure you're tracking carefully because if you go over, they'll take back $1 in benefits for every $2 you earn above the limit.

i went through this last year! its definitely GROSS income that matters to them. i learned the hard way and had to pay back some $ when i reported my earnings. be super careful with your calculations!!!

Are you sure it's $23k?? I thought the limit was much higher like $56k or something. My brother-in-law is collecting SS and works almost full time and hasn't had any reductions. This whole system is so confusing!!! And does anyone know if they count investment income or just work income?? What about rental property?

This is one of the most frustrating parts of dealing with Social Security before reaching FRA. Since you're self-employed, what counts is your NET earnings from self-employment (what you report on Schedule SE). So you can deduct all legitimate business expenses before calculating whether you're over the limit. But be careful - if you're audited, SSA can look at whether you suddenly increased your business expenses just to stay under the limit. They're pretty thorough when investigating these cases.

My sister went through something similar last year. She had to pay back almost $4000 because she went over the limit by about $8000! They don't tell you about this stuff until after it happens. Good luck!

If you're trying to reach SSA to get a definitive answer, good luck! I spent THREE DAYS trying to get through on their 800 number last month for a similar question. Always got the "we're experiencing high call volume" message and then disconnected. I finally used Claimyr (claimyr.com) to get through. They have this service where they wait on hold for you and call when an agent is ready. Saved me hours of frustration. They have a video that shows how it works: https://youtu.be/Z-BRbJw3puU The agent I finally spoke with confirmed it's gross wages for W-2 employees, but net self-employment income (after business expenses) for independent contractors and self-employed people.

To be 100% clear on this topic: 1. For W-2 employees: Gross wages count toward the limit 2. For self-employed (Schedule C): NET earnings from self-employment count (revenue minus business expenses) 3. The earnings test ONLY counts earned income - not pensions, investments, rental income, etc. 4. For 2025, the annual limit is $23,920 if you're under FRA the entire year 5. In the year you reach FRA, a higher limit applies ($56,520 in 2025) and only earnings before the month you reach FRA count 6. After you reach FRA, there is NO earnings limit whatsoever Also, remember that if you do exceed the limit, you'll eventually get that money back in the form of a higher monthly benefit once you reach FRA. SSA recalculates your benefit amount to credit you for the months when benefits were withheld.

To answer the follow-up question about getting money back: When you reach your FRA, Social Security recalculates your benefit amount. They'll increase your monthly payment to account for the months when your benefits were partially or fully withheld due to the earnings test. It's not a lump sum - instead, your monthly benefit will be permanently higher going forward. Essentially, those months when benefits were withheld are treated similarly to months when you didn't take benefits at all (like if you had delayed claiming until later).

The recalculation at FRA is supposed to be automatic, but like everything with SSA, it's good to follow up. I'd recommend checking your benefit amount in the month after you reach FRA to make sure it increased appropriately. And back to the original question - I want to emphasize for the consultant situation that it's net earnings from self-employment that count. That means what you report on Schedule SE after applying the appropriate adjustments to your Schedule C net profit. This actually works in your favor since only about 92.35% of your net profit counts as net earnings from self-employment (due to the self-employment tax calculation).

Just wanted to add one more important point that I learned from my own experience - make sure you report your earnings to SSA accurately and on time! They require you to report any changes in your work situation, and if you're self-employed, you'll need to estimate your annual earnings. If you underestimate and go over the limit, you could face an overpayment that you'll have to pay back. I use their online reporting system at ssa.gov which makes it much easier than calling. Also, keep detailed records of all your consulting income and expenses throughout the year - not just for taxes but in case SSA ever questions your earnings calculations.

As someone who went through this exact situation two years ago, I can confirm that for consulting work, it's your NET self-employment income that counts toward the $23,920 limit - not your gross billings. This means you can deduct legitimate business expenses like equipment, software, office supplies, business travel, etc. before calculating whether you're over the limit. One thing that really helped me was creating a monthly tracking spreadsheet with columns for gross income, business expenses, and net income. This way I could monitor throughout the year and adjust my work schedule if I was getting close to the limit. Also, don't forget that if you do consulting through multiple clients, you'll likely need to make quarterly estimated tax payments anyway, so coordinating with your accountant on both the SSA earnings limit and tax planning makes sense. The good news is that once you reach your FRA in a couple of years, this earnings limit disappears completely and you can work as much as you want without any benefit reductions!

I'm relatively new to Social Security and this thread has been incredibly educational! I'm still a few years away from claiming benefits, but I'm already doing some freelance work on the side and anticipating I might continue that into retirement. One question I have after reading all these responses: if you're doing consulting work and legitimately staying under the earnings limit by deducting business expenses, are there any red flags that might trigger SSA to audit or question your reported earnings? For example, if someone suddenly has much higher business expenses in the year they start collecting benefits compared to previous years, would that raise suspicions? Also, does anyone know if there are specific business expense categories that SSA tends to scrutinize more closely, or do they generally accept whatever you report on your Schedule C as long as it's legitimate for tax purposes?

This has been such a comprehensive discussion! I wanted to add one practical tip that saved me a lot of stress when I was in a similar situation. Since you mentioned you and your accountant have different opinions, I'd strongly recommend getting the official answer directly from SSA in writing if possible. When I finally got through to an SSA representative (took several attempts), I asked them to send me a written summary of what we discussed via my online my Social Security account. This gave me documentation of their official position on how consulting income is calculated for the earnings test. Having that written confirmation was invaluable when my accountant initially disagreed with SSA's interpretation. Also, since you're doing consulting work, make sure you understand the timing aspect too. SSA looks at when you actually earned the income, not necessarily when you received payment. So if you complete a project in December but don't get paid until January, that income still counts toward the previous year's earnings limit. This can be particularly tricky for consultants who might have payment delays or work on retainer arrangements. Good luck navigating this - it's definitely one of the more confusing aspects of early Social Security claiming!

This thread has been incredibly helpful! As someone approaching retirement age myself, I've been wrestling with similar questions about the earnings limit and how it applies to different types of income. One thing I wanted to add that I learned from my own research: if you're doing consulting work and billing clients, make sure you understand whether you're truly self-employed or if any of your consulting arrangements might be considered W-2 employment. Some companies try to classify consultants as independent contractors when they should really be employees, and this can affect how your earnings are calculated for SSA purposes. The IRS has specific criteria about worker classification (control over how work is performed, financial relationship, type of relationship), and if SSA determines that what you thought was self-employment income should actually be treated as wages, it could change how your earnings are calculated toward the limit. In that case, it would be gross wages rather than net self-employment income. I'd suggest reviewing your consulting contracts and work arrangements to make sure the classification is correct. If there's any ambiguity, it might be worth discussing with both your accountant and SSA to avoid any surprises later!

I've been following this discussion closely as someone who went through a similar situation last year. The advice here is spot-on - for consulting work, it's definitely your net self-employment income (after legitimate business expenses) that counts toward the $23,920 limit. One additional resource that helped me was SSA's Publication 05-10069 "How Work Affects Your Benefits" - it has specific examples for self-employed people that really clarified things for me. You can download it from their website or request a copy. Also, since you mentioned having different opinions with your accountant, you might want to show them SSA's own guidance on this. Sometimes tax professionals aren't as familiar with Social Security rules since they focus primarily on tax implications. The earnings test rules don't always align perfectly with tax law, so it's worth making sure everyone is on the same page about which rules apply for SSA purposes versus tax purposes. Keep detailed monthly records of both your gross consulting income and business expenses - this will make year-end calculations much easier and give you peace of mind that you're staying within the limits. Good luck!

As someone who recently started navigating Social Security while still working, this entire discussion has been incredibly eye-opening! I'm not quite at retirement age yet, but I'm already planning ahead since I do some freelance work that I'd like to continue. One thing that really stands out to me from all these responses is how important it is to get accurate information directly from SSA rather than relying on assumptions or even well-meaning advice from friends and family. It seems like there are a lot of misconceptions out there about how the earnings limit works. I'm curious - for those of you who have successfully managed to stay under the earnings limit while doing consulting work, do you find it's better to be conservative with your income projections, or do you try to maximize earnings right up to the limit? I imagine there's some strategy involved in terms of timing projects and managing cash flow throughout the year. Also, has anyone dealt with situations where clients pay late or project timelines shift unexpectedly? It seems like that could make it really challenging to accurately predict annual earnings, especially for the SSA reporting requirements that were mentioned. Thanks to everyone who has shared their experiences here - this is exactly the kind of real-world guidance that's so hard to find elsewhere!

This has been such a comprehensive and helpful discussion! As someone who's about to face a similar situation in the next year or two, I really appreciate everyone sharing their real-world experiences with the earnings limit while doing consulting work. One thing I wanted to add that might be helpful - I recently attended a Social Security workshop through our local senior center, and the presenter emphasized the importance of understanding the monthly earnings test in addition to the annual limit. For 2025, if you're under FRA the entire year, you can earn up to $1,993 per month without affecting your benefits, regardless of your annual total. This monthly test can sometimes be more favorable if your consulting income is uneven throughout the year. For example, if you have a big project that pays $15,000 in one month but then don't work for several months, the monthly test might protect more of your benefits than just looking at the annual limit. It's worth understanding both rules since SSA applies whichever is more favorable to you. Also, I wanted to second the advice about keeping meticulous records. Even if you're confident about staying under the limit, having detailed documentation makes everything so much smoother if questions ever come up. Thanks again to everyone who shared their insights - this is exactly the kind of practical guidance that's invaluable for people navigating these complex rules!