Knowing
if a person qualifies for Social Security benefits can be a bit confusing. Here is some helpful info to make it more clear for you.
Social
Security benefits are based on the years you make your highest wage.
Therefore, if you currently have a high paying job, your Social Security
benefits may be increasing.
If
you are younger than age 65 and 10 months during the current year, $1 from each
$2 of earnings above $12,960 will be deducted from your benefits.
If
you turn 65 years and 10 months during the current year, $1 from each $3 of
earnings above $34,440 will be deducted from your benefits.
If
you are self-employed, count all net earnings as income at the time you receive
them. An exception to this rule is
if you earned some money before you became eligible for Social Security and you
weren’t paid this money until after you became eligible for Social Security.
In this case, the money would count as being received before your Social
Security benefits began.
This same rule also applies if you are an employee. The money you earn is counted as income at the time you actually earn it, not necessarily when you receive it from your employer.
When is the best time to begin collecting Social Security benefits? Technically a person is eligible for partial Social Security benefits at age 62. However, if you begin collecting your benefits early, you will receive a reduced amount of money each year for the rest of your life. For example, someone who starts receiving Social Security benefits at age 62 will only receive 70% of the maximum amount they would have gotten if they waited until full retirement age.
Therefore, if it’s realistic for you, it’s best to wait until you qualify for full Social Security benefits before beginning to collect them. This way you will be given the maximum amount allowed.
“Tax Tips” are the opinions of Executive Accounting Solutions, which is not a substitute for individual accounting, tax, and professional services since individual situations vary.