Can I Deduct Moving Expenses From My Countable Earnings Under Social Security's Earnings Test?

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Mar 27 2017 - 7:15am

I retired in 2014 (born 1952). I need to go back to work in 2016, and i made over $26,000. I know I could made around $15,000 without reducing my SS payments. I am doing my federal taxes. Question1; Can I reduce the $11,000 by my expenses on moving to the job location. ( From New Orleans to Birmingham, AL.) I returned home to New Orleans about one a month, can I claim these expenses to reduce the $11,000. When I got the job I called the local SS dept to adjust my payments but my records was not updated. I did not learned this until I return back home when my wife told me. Question #2- will the six months of work paying SS, help my benefits in the future to claim the SS's payments. Thanks you for your help because SS benefits are very hard to understand

Hi,

The countable amount of earnings for Social Security earnings test purposes (https://www.ssa.gov/planners/retire/whileworking2.html) are your gross wages and/or net earnings from self-employment. So, if you worked for wages and received a W-2 form, it's unlikely that your moving expenses could be used to reduce your countable earnings. I should clarify that I'm referring to the Social Security earnings test rules only, and not income taxes. On the other hand, if you were self-employed (e.g. independent contractor) and the moving expenses can be deducted as a business expense, then they likely would reduce your countable earnings under the Social Security earnings test.

Your 2016 earnings may or may not increase your Social Security benefit rate. Social Security retirement benefits are calculated based on an average of a person's highest 35 years of work-adjusted earnings (https://www.ssa.gov/pubs/EN-05-10070.pdf), so your benefit rate will only increase if your 2016 earnings were higher than the adjusted earnings in one the years previously used in computing your benefit rate. Although Social Security should eventually automatically increase your benefit rate if appropriate, you may be able to speed up the process by submitting proof of your 2016 earnings to Social Security and requesting a manual recomputation.

Best, Jerry