Will 2024 business sale income affect my Social Security benefits at 62?

Good news - the income from selling your business won't affect your Social Security benefit calculation. SS benefits are based on your lifetime earnings record over a 35-year period, specifically the highest 35 years of your earnings that were subject to Social Security taxes. A one-time spike in income during your retirement year won't impact the calculation of your Primary Insurance Amount (PIA). However, there IS something important to consider: the earnings limit for 2024 is $21,240 if you're under Full Retirement Age (FRA). If your W-2 or self-employment income exceeds this amount, SS will withhold $1 in benefits for every $2 you earn above the limit. The recaptured depreciation might not count as earned income for this purpose, but any business profits before the sale would count.

be carful with earing limits!! my brother got a HUGE bill from SSA after he sold his shop. they wanted back like $7k in benefits. somthing about his income being to high that year even tho he didnt work after getting benefits

The previous responses have a couple of important points to clarify. Let me break this down completely: 1. Benefit CALCULATION: Your lifetime earnings record determines your benefit amount. The sudden income spike from selling your business won't change your basic benefit calculation. 2. Earnings TEST (not limit): This is where it gets tricky. For 2024, if you're 62, SSA will deduct $1 for every $2 you earn above $21,240 for the ENTIRE YEAR. 3. What counts as "earnings": Only wages and active self-employment income count against the earnings test. Capital gains, investment income, and the gain from selling business assets are NOT counted. However, if your business was a sole proprietorship or partnership, the profits from January-April operation DO count as earned income. The recaptured depreciation might be considered part of the business sale and not count as earned income—but this depends on how your taxes are structured. I'd strongly recommend consulting with a tax professional who understands both business sales and Social Security rules before filing.

I went through something similar last year selling my hardware store. The SSA only looked at my W-2 income for the earnings test, not the business sale profits. But they do look at your ANNUAL earnings, not just what you earn while collecting benefits. So if you made $50,000 in salary from Jan-April, they'll still count that against your annual limit even though you weren't collecting benefits yet.

Have you tried calling the SSA to ask about your specific situation? They should be able to tell you exactly how the business sale will impact things.

Just wondering - did you already pay yourself a salary from your business earlier this year before selling it? Or are you just getting a lump sum from the sale?

Since your W-2 income this year is approximately $42,000, that exceeds the annual earnings threshold of $21,240 by about $20,760. This means the SSA would withhold approximately $10,380 in benefits (half of the amount you exceeded the limit) for 2024. Options to consider: 1. Apply in August as planned, but recognize that you may receive very little or no benefits for the remainder of 2024 due to the withholding. 2. Delay application until January 2025 when your earned income will be much lower or zero. 3. Delay until a later age for higher monthly benefits (each year you delay between 62 and 70 increases your monthly amount). Remember: This withholding isn't a permanent reduction. The SSA recalculates your benefit when you reach Full Retirement Age to credit you for months when benefits were withheld.

ur overthinking this!! just wait till january and it'll be fine. thats what my neighbor did

Thanks everyone for the helpful advice! Based on what I've learned, I think I'll wait until January 2025 to apply rather than dealing with all the withholding complications this year. I'll use Claimyr to get through to an SSA representative to confirm this plan makes sense for my specific situation. Really appreciate all the insights about how the earnings test works vs. the benefit calculation!