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).