Social Security earnings test confusion - self-employment hours vs. income limits before FRA

The earnings test can be tricky, especially with self-employment. Here's what you need to know: 1. Yes, there is both an income limit AND an hours limit for self-employed individuals. The "45 hours per month" rule is part of what Social Security calls the "self-employment test." If you work over 45 hours/month in your business, SSA generally considers you not retired regardless of earnings. 2. For self-employment, it's based on NET income (after business expenses), not gross. 3. For December 2024, it falls under the 2024 annual earnings limit (around $59,520 for months before FRA). You won't need to specifically document just December - SSA looks at your annual tax return, but you should keep good records of hours worked. Keep in mind that only the months BEFORE you reach FRA in 2025 count toward the earnings limit. Once you hit your FRA, there are NO limits on earnings or hours worked.

Careful! I got BURNED by this last year!!! I thought I was under the limit because my NET was below the threshold, but SSA counted some of my business deductions differently than my accountant did. They said some of my home office and vehicle expenses weren't "ordinary and necessary" and added them back to my income. Ended up owing back $7,600 in benefits!!! 😡 The whole self-employment hour thing is REAL too - my neighbor got caught when someone reported him working too many hours even though he wasn't making much money. Keep a TIME LOG of every hour you work!!! The system is designed to trip us up I swear.

my brother went thru this last year. he just wrote down his hours every day in a notebook and kept track of money in excel. SSA never even asked for proof tbh

Let me see if I can clear up a few things about self-employment and Social Security: 1. The monthly earnings test applies only if you're in your first year of receiving benefits. After that, SSA switches to an annual test. So December 2024 will be evaluated on its own, while 2025 will usually be evaluated as a whole year (with adjustments for reaching FRA). 2. For December 2024, you need to stay under 1/12 of the annual limit (about $4,960 if the 2024 limit is $59,520). And yes, keep your hours under 45 for that month. 3. For the months before FRA in 2025, the higher threshold applies (probably around $64,000 for the entire period). 4. The documentation SSA typically wants: your self-employment tax returns, business records, and potentially a log of hours worked. But they don't always request this unless they have questions. One more thing - if you do exceed the limits, SSA withholds $1 in benefits for every $2 you earn above the limit (before FRA). Once you reach FRA, the earnings test disappears completely.

omg the whole FRA thing is SO confusing. I thought it was just 65 but then its different for everyone?? And what even counts as "work" for the 45 hours? like if im thinking about client work while walking my dog does that count lol

I had similar concerns last year when I started my benefits. I tried calling SSA directly to clarify some of these points about self-employment income, but kept getting disconnected after waiting for hours. I ended up using Claimyr (claimyr.com) which got me connected to an SSA agent within 20 minutes. The agent was able to clearly explain how my specific self-employment situation would be evaluated. They have a video demo at https://youtu.be/Z-BRbJw3puU that shows how it works. I was skeptical at first, but it saved me days of frustration trying to get through on my own. The agent I spoke with confirmed that all business activities count toward the 45 hours - client work, admin, marketing, everything. She also explained exactly what documentation I should keep just in case.

IMPORTANT NOTE: Whatever you do, DON'T report monthly earnings to SSA unless they specifically ask!!! They'll set up a horrible monthly reporting requirement that's a NIGHTMARE to deal with. Just file your annual tax return and let them figure it out afterward. Remember: the earnings test is figured ANNUALLY even though there are monthly rules in play. It's completely idiotic how they set this up!!!

wait i'm confused is this about SSI or regular social security? cuz the rules are different right?

One more important point: If you do exceed the earnings limit, SSA doesn't necessarily reduce each month's benefit by the same amount. They typically withhold benefits completely for some months rather than reducing each payment. For example, if they determine you need to repay $5,000, and your monthly benefit is $2,500, they might withhold 2 full months of benefits. They'll notify you before they do this. Also, remember that any benefits withheld due to excess earnings aren't truly "lost" - once you reach FRA, SSA recalculates your benefit amount to give you credit for those months when benefits were withheld.