1804. How Excess Earnings are Charged Against Benefits

1804.1 When are excess earnings charged against your benefits?

When you have excess earnings, these earnings are charged against and deducted from your benefits. The deductions begin with the first chargeable month of the taxable year and continue each month until all excess earnings have been charged.

(See §1805 for months to which earnings cannot be charged.)

1804.2 How do excess earnings affect family insurance benefits?

If you receive retirement insurance benefits, your excess earnings are charged against the total monthly family benefit. This reduces the total family benefit. The family benefit includes all monthly benefits (other than disability insurance benefits) payable to you and anyone else (e.g., spouse or child) entitled to benefits on your earnings record. It also includes benefits payable to your spouse on any earnings record as a disabled child, a mother, or a father.

Note: Your excess earnings do not cause deductions from the benefits of an entitled divorced spouse who has been divorced from you for at least two years in a row.

Mr. Bond is entitled to a retirement insurance benefit of $378. His wife and child are each entitled to an auxiliary benefit of $160. Mr. Bond worked and had excess earnings of $2,094. These earnings are charged against the total monthly family benefit of $698 ($378 plus (2 x $160)). Therefore, no benefits are payable to the family for January through March (3 x $698 = $2,094).

1804.3 How do excess earnings of someone entitled to benefits on your record affect benefits?

If a survivor or other person entitled to benefits on your Social Security record has excess earnings, only his or her monthly benefit amount is charged and deducted.

Same facts as the example in (1804.2) above, except it was the wife who worked. Her excess earnings were $800, which are charged only against her own monthly benefit of $160. She therefore receives no payments for January through May (5 x $160 = $800).

1804.4 How are your benefits affected if you and someone entitled to benefits on your record have excess earnings?

If you and a person entitled to benefits on your earnings record (auxiliary) both have excess earnings:

1. First, your excess earnings are charged against the total monthly family benefit; and

2. Next, the auxiliary's excess earnings are charged against his or her own benefits. However, they are only charged to the extent that those benefits have not already been charged with your excess earnings.

Mrs. Malcolm is entitled to a retirement insurance benefit of $346, and her husband is entitled to a spouse's insurance benefit of $173. Mrs. Malcolm had excess earnings of $2,076. Her husband had excess earnings of $865.

Mrs. Malcolm's earnings are charged against the total monthly family benefit of $519 ($346 plus $173), so neither Mrs. Malcolm nor her husband receives payments for January through April (4 x $519 = $2,076). The husband's excess earnings are charged only against his own benefit of $173. Since his benefits for January through April were charged with the worker's excess earnings, the charging of his own earnings cannot begin until May; therefore, he receives no benefits for May through September (5 x $173 = 865).

Last Revised: Nov. 3, 2003