What income counts against Social Security?

Social Security is primarily affected by your earned income (wages, net self-employment earnings) for calculating your benefit amount over your lifetime, and if you're collecting early, this earned income can also reduce benefits above an annual limit. Passive income (pensions, investments, interest, annuities) generally does not count toward these earnings limits or benefit reductions, though it's still taxable income.

What income is not counted by Social Security?

Social Security generally doesn't count passive income or certain benefits, including pensions, annuities, interest, dividends, capital gains, gifts, inheritances, most government benefits (like Veterans' benefits), and rental income, when determining if you've exceeded earnings limits or to reduce your benefits (though some exceptions apply for SSI). What is counted are your actual wages or net self-employment earnings, including bonuses, commissions, and tips above a certain amount. 

What is one of the biggest mistakes people make regarding Social Security?

Claiming Benefits Too Early

One of the biggest mistakes people make is claiming Social Security benefits as soon as they're eligible, which is at age 62. While getting money sooner can be tempting, claiming early has a significant downside: your monthly benefit will be reduced.

What types of income reduce Social Security benefits?

When we figure out how much to deduct from your benefits, we count only the wages you make from your job or your net profit if you're self-employed. We include bonuses, commissions, and vacation pay.

How much income can I have and still get Social Security?

You can have unlimited income on Social Security once you reach your Full Retirement Age (FRA), with no reduction in benefits; however, if you're under FRA, the Social Security Administration (SSA) reduces benefits by $1 for every $2 earned over a yearly limit (e.g., $24,480 in 2026) until you hit FRA, and then by $1 for $3 over a higher limit ($65,160 in 2026) in the year you reach FRA. 

What Income Counts Towards Social Security Earnings Limit?

How much do you have to make to get $3,000 a month in Social Security?

To get around $3,000/month in Social Security, you generally need a high earning history, around $100,000-$108,000+ annually over your top 35 years, but waiting to claim until age 70 maximizes this amount, potentially reaching it with lower yearly earnings, say under $70k if you wait long enough, as benefits are based on your highest indexed earnings over 35 years. The exact amount depends heavily on your specific earnings history and the age you start collecting benefits. 

What are the three ways you can lose your Social Security?

You can lose Social Security benefits by working while collecting early, leading to earnings limits; incarceration, which suspends payments; or through garnishment for federal debts like taxes, student loans, or child support, along with other factors like remarriage or changes in disability status. 

What is not counted as income?

Inheritances, gifts, cash rebates, alimony payments (for divorce decrees finalized after 2018), child support payments, most healthcare benefits, welfare payments, and money that is reimbursed from qualifying adoptions are deemed nontaxable by the IRS.

What income is not countable?

TYPES OF INCOME

Some common examples of unearned income include contributions, railroad retirement, Social Security, and Veteran's benefits. Earned or unearned income from any source that is received in a lump sum payment is not countable as income.

What income stops Social Security?

Social Security taxes don't stop at a certain salary; instead, they stop being applied once your earnings hit the annual Social Security wage base, which is $184,500 for 2026, meaning you pay 6.2% on earnings up to that amount and nothing more for Social Security tax, though Medicare tax continues on all earnings. If you're receiving benefits while working, your benefits might be reduced if you earn above limits before your full retirement age, but once you reach full retirement age, you can earn unlimited amounts without benefit reduction. 

What is the $1000 a month rule for retirement?

The $1,000 a month retirement rule is a simple guideline stating you need about $240,000 saved for every $1,000 of monthly income you want from your investments in retirement, based on a 5% annual withdrawal rate ($240k x 0.05 / 12 = $1k/month). It's a motivational tool to estimate savings goals (e.g., $3,000/month needs $720k), but it's one-dimensional, doesn't account for inflation, taxes, or other income like Social Security, and assumes steady 5% returns, making a personalized plan essential. 

What does Dave Ramsey say about Social Security?

Dave Ramsey views Social Security as a supplement, not a primary retirement income, emphasizing that relying on it is a "dumb" idea; he advocates for claiming benefits as early as 62 if you're debt-free to invest the money for potentially higher returns, while also warning about potential future cuts due to trust fund depletion and urging strong reliance on 401(k)s and IRAs. 

What are the 13 retirement blunders to avoid?

To avoid common retirement blunders, focus on strategic withdrawals (not just account balance), diversify investments (including international), don't be too conservative or time the market, plan for taxes, control fees, maximize employer matches, manage debt, claim Social Security wisely, and plan for non-financial aspects like purpose and social connection. Key financial mistakes include underestimating expenses (especially healthcare), overspending early, and failing to adapt your investment strategy for income generation. 

What is excluded income?

Income excluded from the IRS's calculation of your income tax includes life insurance death benefit proceeds, child support, welfare, and municipal bond income. The exclusion rule is generally, if your "income" cannot be used as or to acquire food or shelter, it's not taxable.

What types of income do you have to report to Social Security?

Only earned income, your wages, or net income from self-employment is covered by Social Security. If money was withheld from your wages for Social Security or FICA (Federal Insurance Contributions Act), your wages are covered by Social Security.

What is the deemed income?

Deemed income is income from one person (like a parent, spouse, or sponsor) that the government "counts" as available to another person (like a child or sponsored immigrant) to determine benefit eligibility, even if the money isn't actually given to them, to ensure support is shared. It also refers to unexplained income or assets (like cash credits, investments, or sudden wealth) that tax authorities treat as taxable, often at a high rate, when a taxpayer can't prove its source. 

What is the $600 rule?

In 2021, Congress lowered the threshold for reporting income on payment apps from $20,000 and 200 transactions annually to $600 for a single transaction. Implementation is being phased in over three years. Tax Year 2024: $5,000 minimum.

What is non-countable income?

Non-countable or excluded income, including but not limited to, the value of SNAP benefits or benefits from certain other federal programs, or cash income over which the household has no control. Income deductions (what will be subtracted from income), such as medical expenses.

What income is excluded from gross income?

foreign earned income and housing (see U.S. Taxation of Citizens and Residents Abroad - Foreign Earned Income Exclusion); certain fringe benefits (see Statutory Fringe Benefits Under Section 132); certain military-related amounts (see Military Service Members); general welfare payments (discussed below);

Does selling a house count as income for social security?

No, selling your primary home typically doesn't count as income for regular Social Security (Retirement/Survivor) benefits and won't reduce your monthly check, but significant profits could affect your Medicare premiums (IRMAA). However, for Supplemental Security Income (SSI), the proceeds do count as a resource, and selling a home can make you ineligible if your total assets exceed the SSI limit, though there are ways to reinvest proceeds to qualify for conditional benefits. 

What is not a source of income?

Sources of income include wages, salaries, stipends, and other payments received for services or work. A student loan payment, however, is not income—it is a liability or expense, as it represents money you owe and are repaying, not money you are earning.

Which incomes are not included in total income?

In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included— (1)agricultural income ; (2)subject to the provisions of sub-section (2) of section 64, any sum received by an individual as a member of a Hindu undivided family, where such sum ...

What things reduce Social Security benefits?

Indeed, here are three ways you can lose at least part of your Social Security benefit.

• No. 1: Keep working while taking benefits early. ...
• No. 2: Be a substantially lower-earning spouse. ...
• No. 3: Be alive in 2034. ...
• Social Security still provides an important foundation for retirement.

What will reduce my Social Security benefits?

Social Security benefits can be reduced due to claiming early (before full retirement age), earning above a certain limit while receiving benefits, unpaid debts (like taxes or student loans), Medicare premium deductions, low earning years in your record, or for Supplemental Security Income (SSI) recipients if they receive significant help with food/housing. The most common reasons involve claiming early for a permanently reduced monthly amount or having your benefit temporarily docked for working too much or owing money. 

What's changing with Social Security in 2025?

The COLA was 2.5 percent in 2025. Nearly 71 million Social Security beneficiaries will see a 2.8 percent COLA beginning in January 2026. Increased payments to nearly 7.5 million people receiving SSI will begin on December 31, 2025.