Terry, from Atlanta writes: Can I Receive Passive Income While Collecting Social Security?
A good question, one that has portions to it, let me clarify. Once you achieve Full Retirement Age (FRA) your Social Security is taxed as ordinary income, however, if you are drawing social security prior to FRA, then you may have some taxation in addition to regular earnings.
The Social Security Earnings Test, income based on national average wage index.
Exempt Amounts for 2024
The annual exempt amount in 2024 is $22,320. For people attaining NRA (normal retirement age) in 2024, the annual exempt amount is $59,520. This higher exempt amount applies only to earnings made in months prior to the month of NRA attainment.
Benefits Withheld When Earnings Exceed Exempt Amounts
Social Security will withhold $1 in benefits for every $2 of earnings in excess of the lower exempt amount. SS will withhold $1 in benefits for every $3 of earnings in excess of the higher exempt amount. Earnings in or after the month you reach NRA do not count toward the retirement test.
The income, of concern, in the Social Security Earnings Test are incomes generated from a wage or business, investment income, for example, and retirement-plan payouts are ignored.
