Will selling my business vehicle count toward Social Security earnings limit of $22,300?

You're correct. Capital gains (including depreciation recapture) from selling business assets are NOT counted toward the Social Security earnings test limit. The earnings test only counts wages and net earnings from self-employment (your actual business activity). The $10K from selling your business vehicle is considered investment income, not earnings from work. Keep good records of the sale and how you calculated the gain in case questions come up later.

omg the SS earnings test is so confusing!!! i thought anything from ur business counts?? now im confused about my situation too

My tax accountant specifically addressed this for me last year. Capital gains from business asset sales (including recaptured depreciation) do NOT count toward the Social Security earnings test. However, they do count as income for determining whether your Social Security benefits are taxable. So while you're good regarding the earnings limit, you might need to pay more tax on your benefits depending on your total income. Something to be aware of!

I WENT THROUGH THIS EXACT SAME THING in 2023 and the SSA rep I talked to gave me WRONG information! He told me it counted and they reduced my benefits!!!! I had to fight for 5 months to get my money back when they finally admitted it shouldn't have counted. The SSA reps don't even understand their own rules half the time!!

This is a common question with a clear answer: The earnings test only counts wages and net self-employment income from active business operations. Capital gains from selling business assets are excluded from the earnings test calculation. SSA's Program Operations Manual System (POMS) section RS 02505.240 explicitly addresses this, stating that certain types of income are not included in the retirement test, including "capital gains and losses." Just make sure you're properly documenting the sale as a business asset transaction on your tax return.

Correct. Stock sales and the resulting capital gains do not count toward the earnings test limit regardless of whether they're personal or business investments. The earnings test only looks at income from current work activity.

Try calling the SSA directly to get a definitive answer for your specific situation. I had a complex question about self-employment income last month and needed to talk to someone at SSA, but kept getting disconnected after waiting hours. I found this service called Claimyr (claimyr.com) that got me through to a real person at SSA in about 20 minutes instead of waiting for hours. They have a video showing how it works: https://youtu.be/Z-BRbJw3puU. It was worth it to get a clear answer directly from SSA about my specific situation.

Just to clarify another important point: While the $10K from selling your vehicle won't count toward the earnings test, you should be aware that any business income you earn between now and the month you reach full retirement age will still be subject to the earnings limit. The month you reach FRA, the earnings limit disappears completely. Many people don't realize this and think they're subject to the limit for the entire calendar year they reach FRA.

my brother had the same issue when he sold his business truck and ss didnt count it against him so your probably ok

I recommend documenting everything clearly on your tax forms. Make sure the gain from the vehicle sale is properly reported on Form 4797 (Sales of Business Property) rather than being mixed with your regular Schedule C business income. This keeps it clearly separated from your self-employment earnings that count toward the limit. I've found that proper tax form completion prevents a lot of headaches with SSA later.

As someone who just went through this process myself, I can confirm that capital gains from selling business assets absolutely do NOT count toward the Social Security earnings limit. I sold some equipment from my consulting business last year and was initially worried about the same thing. The key distinction is that the earnings test only applies to income from active work - wages and net self-employment income from ongoing business operations. Capital gains, even from business assets, are considered investment income rather than earnings from work. Just make sure you keep good records of the sale price, your basis in the vehicle, and any depreciation you've claimed over the years. Your accountant should report it properly on Form 4797 to keep it separate from your Schedule C business income. You're smart to be cautious about staying under the limit, but this particular transaction won't affect your Social Security benefits at all.

I'm in a similar situation and have been tracking this issue closely. One thing I'd add is that you should also be aware of how the depreciation recapture portion gets treated. While the entire gain (including depreciation recapture) doesn't count toward the Social Security earnings limit, the depreciation recapture portion is taxed as ordinary income rather than capital gains rates. This won't affect your SS benefits but could push you into a higher tax bracket. Also, if you're getting close to the combined income thresholds that determine taxation of Social Security benefits ($25K single/$32K married), this extra income could make more of your benefits taxable even though it doesn't count toward the earnings test. It's one of those quirky situations where the same income is treated differently for different purposes within the Social Security system.