Will SS reduce benefits for Real Estate Professionals when filing early? Confused about substantial services rule

The substantial services rule and Real Estate Professional status are actually two separate things that impact you differently. For Social Security, what matters is your earnings, not your tax classification. In 2025, if you're under Full Retirement Age and earn more than $22,320 (the annual earnings limit), Social Security will deduct $1 for every $2 you earn above that limit. So yes, with $24,000 in commission income, you would have $1,680 above the limit, resulting in approximately $840 reduction in annual benefits. Being classified as a Real Estate Professional for tax purposes doesn't exempt you from the Social Security earnings test. The substantial services rule you mentioned typically applies to self-employed individuals where SSA examines whether you're performing significant services in your business, but the earnings test is still the primary factor.

Thank you for explaining! So even though my tax filing status as a Real Estate Professional gives me certain tax advantages, it doesn't help with the SS earnings test? That's disappointing but good to know. Is there any way to structure my real estate work to minimize the impact on my benefits?

i went through this last year. the real estate professional status is just a tax thing, doesn't matter to SS at all. they ONLY care about your earnings. if u make over the limit, they take some of your ss money back. simple as that. don't overthink it!

Thanks for sharing your experience. Did you end up reducing your work hours to stay under the limit, or did you just accept the reduction?

The SSA will absolutely reduce your benefits if you make over the earnings limit! I lost almost $4,000 in benefits last year because I didn't understand this properly. My accountant kept telling me about special rules for self-employed people and

Oh no, that sounds rough! I didn't realize they might take it all from a few checks rather than spreading it out. That could really mess up my monthly budget. Thanks for the warning.

My sister is in real estate too and she decided to wait until her FRA to claim instead of dealing with all this earnings test nonsense. Sometimes the simplest solution is the best one!

I've considered waiting, but I really need the income now, even if it's reduced. Ideally I'd like to find a way to balance my work and benefits.

There's a lot of confusion around this topic, so let me clarify how the substantial services rule works for self-employed individuals like real estate professionals:1. The earnings test applies first - $22,320 is the 2025 limit for those under FRA2. But for self-employed people, SSA may also apply the substantial services test, which looks at whether you're working more than 45 hours per month in your business. This is separate from the Real Estate Professional classification for taxes (which requires 750+ hours annually).3. If you work less than 15 hours per month, you're exempt from the substantial services test. Between 15-45 hours is a gray area where other factors matter.Since you're working enough hours to qualify as a Real Estate Professional for taxes, you're almost certainly providing substantial services in SSA's view, so the earnings test will definitely apply to you.Your best options are to either:1. Reduce work to stay under the earnings limit2. Accept the benefit reduction knowing you'll get it back later (they recalculate your benefits at FRA)3. Delay claiming until you reach your FRA when the earnings test no longer applies

This is extremely helpful! I didn't realize there were hour thresholds for the substantial services test that are different from the Real Estate Professional classification. I might be able to stay under 45 hours some months. Would that help at all, or does exceeding it in even one month trigger the test for the whole year?

I had the exact same question when I filed for SS last year while still working in real estate. I kept getting disconnected and waiting forever on hold with Social Security. Finally found this service called Claimyr that got me through to an SSA rep in about 20 minutes. They have a video that shows how it works: https://youtu.be/Z-BRbJw3puU. The SSA rep I talked to explained that your tax status as a Real Estate Professional doesn't matter for the earnings test - they just look at your actual income. For self-employed people though, they might consider the services you perform in your business in addition to your income. Worth calling to get clarification specific to your situation at claimyr.com.

That service sounds helpful! I've been trying to get through to a knowledgeable SSA rep for weeks with no luck. I'll check out their video - might be worth it just to get a definitive answer about my specific situation. Thanks for sharing!

Why not just setup an S-Corp for your real estate business and pay yourself a salary under the earnings limit? Then take the rest as distributions which don't count toward the earnings test. Thats what my friend did. Talk to your CPA tho, Im not a tax professional.

This is actually incorrect advice. The Social Security Administration looks at both wages AND self-employment income (including most business profits) when applying the earnings test. Setting up an S-Corp and taking distributions instead of salary is a common tax strategy, but SSA specifically looks at your earnings from significant services in self-employment, regardless of how they're classified for tax purposes. They can and do examine business arrangements to determine if they're legitimate or just attempts to avoid the earnings test.

My neighbor is a realtor and she just does fewer listings during the year to keep her income under the limit. Says it's not worth losing the SS money.

thats what i ended up doing too. i take fewer clients and only the higher commission ones. work smarter not harder lol

Thanks everyone for all the great information! I think I'm going to call SSA using that Claimyr service to get answers specific to my situation, then talk to my financial advisor about whether I should reduce my hours/income or just accept the benefit reduction. At least now I understand that my Real Estate Professional status for taxes won't help me avoid the earnings test. Really appreciate all your insights!

Good plan. One more thing to consider - any benefits withheld due to excess earnings aren't truly

As someone who went through this exact situation two years ago, I can share what I learned. The key thing to understand is that SSA applies both the earnings test AND potentially the substantial services test for self-employed individuals. Since you're earning $24,000 and clearly working substantial hours (750+ for REP status), you'll definitely be subject to benefit reductions. However, don't despair - those withheld benefits aren't lost forever. At your Full Retirement Age, SSA will recalculate your benefit amount to give you credit for the months when benefits were reduced or withheld. This actually increases your monthly benefit going forward. I found it helpful to think of it as a forced delay rather than a true loss. The math worked out better for me in the long run, especially since I'm still earning good income. Just make sure to report your earnings accurately to avoid overpayment issues later!

As a newcomer to this community, I'm finding this discussion incredibly valuable! I'm in a similar situation - approaching 62 and working as a freelance consultant with income that will likely exceed the earnings limit. The confusion around how different employment classifications affect Social Security benefits is real - I've gotten different answers from multiple sources. What strikes me most about this thread is how @JaylinCharles reframed the earnings test as a "forced delay" rather than a permanent loss. That perspective shift is huge for someone like me who was viewing the benefit reductions as throwing money away. I'm curious though - for those who've gone through this, how predictable is the income from month to month? In consulting, I sometimes have big months followed by slower ones. Does SSA look at annual earnings or do monthly fluctuations matter for the substantial services test? Also, has anyone here tried the Claimyr service that @Dmitry mentioned? Getting consistent, knowledgeable answers from SSA has been challenging, and if there's a way to actually speak with someone who understands these nuances, that would be worth exploring. Thanks to everyone sharing their real experiences - it's so much more helpful than the generic information you find elsewhere!

As someone new to this community and facing a similar situation, this entire discussion has been incredibly enlightening! I'm 61 and work as a financial consultant, so I'll likely face the same earnings test challenges when I file early next year. What I find most valuable here is the distinction everyone's made between tax classifications (like Real Estate Professional status) and Social Security rules - they really are separate systems with different criteria. @JaylinCharles, your perspective about the "forced delay" rather than permanent loss is a game-changer for how I'm thinking about this decision. I was getting caught up in viewing any benefit reduction as money down the drain. @Sofia, your breakdown of the substantial services test with the hour thresholds was particularly helpful - I had no idea there were specific monthly hour limits that SSA considers. For those considering the Claimyr service, I actually used them last month for a different SS question and found them very helpful. The wait time was much shorter than calling SSA directly, and the representative was knowledgeable about self-employment issues. One thing I'm still unclear on - does anyone know if SSA counts hours differently for different types of self-employment? For example, would hours spent on administrative tasks (like bookkeeping, marketing) count the same as direct client work for the substantial services test? Thanks everyone for sharing your experiences - this is exactly the kind of practical insight that's impossible to find in official SSA publications!

As someone completely new to this community and just starting to understand Social Security rules, I'm amazed by how helpful this discussion has been! I'm 62 and work as an independent contractor in marketing consulting, and I've been putting off filing for SS because I couldn't get clear answers about how my work income would affect benefits. The distinction everyone's made between tax classifications and SS rules is so important - I was also confused thinking my business structure might somehow help with the earnings test. @JaylinCharles, your "forced delay" perspective is brilliant and really changes how I view this whole situation. Instead of seeing benefit reductions as punishment for working, it's more like SSA holding onto money that I'll get back later with interest through higher monthly payments. @Sofia, thank you for breaking down the substantial services test - I had no idea about those hour thresholds! For someone like me who works irregularly (some months 60+ hours, others maybe 10), understanding that monthly variation matters is crucial. I'm definitely going to look into the Claimyr service that several people mentioned - getting knowledgeable help navigating these complex rules seems worth the investment. One question for the group: has anyone found a good way to track business hours for SSA purposes? I'm wondering if there's a simple system that captures both direct work and administrative time that would satisfy their requirements if they ever audit substantial services. Thanks to everyone for sharing real experiences instead of just regurgitating official policy language!

As a newcomer to this community, I'm incredibly grateful for all the detailed insights shared here! I'm 63 and work as a freelance graphic designer, facing the same earnings test dilemma. What really resonates with me is @JaylinCharles's "forced delay" perspective - I was also viewing the benefit reductions as permanent losses rather than deferred payments with future compensation. The clarification about Real Estate Professional tax status being completely separate from Social Security rules is crucial - I had similar confusion about whether my LLC structure might help (spoiler: it doesn't!). @Sofia's breakdown of the substantial services test hour thresholds was particularly enlightening. As someone who sometimes works 50+ hours in busy months and maybe 20 in slower ones, understanding that SSA looks at this monthly is important for planning. I'm curious about one thing though - for those who've been through the FRA recalculation process, roughly how long after reaching FRA did you see the adjusted payments kick in? Was it immediate or did it take several months? I'm leaning toward filing early and accepting the temporary reductions, especially after reading about the eventual benefit increase. The Claimyr service mentioned by several people sounds worth investigating too - getting clear, consistent information about these complex rules seems challenging through regular SSA channels. Thanks everyone for sharing real experiences instead of just policy jargon!