Are Earnings For Caregiving For A Disabled Adult Child Excluded From The Annual SS Earnings Limit?

Category: 
Nov 14 2019 - 6:05pm

Hello,
Are earnings for caregiving for a disabled adult daughter, who lives in our home, excluded from the annual SS earnings limit?
In 2019, the annual earnings limit for those under full retirement age (FRA) is $17,640. Pensions are not counted toward the earnings limit. As paid caregivers to our disabled adult daughter, the caregiving income is excluded from taxes based upon the parents caregiver tax exemption Notice 2014-7. My assumption is caregiving income would not apply to SS income earnings limit.
Our story:
I filed for my Social Security benefit 18 months ago at age 63. I took a reduced SS benefit as my filing for my benefit started the 2 year countdown for Medicare enrollment for my disabled adult child whose disability is permanent and since birth.
When I filed for my SS benefit. our disabled adult daughter lost her SSI benefit and began to receive Disabled Adult Child benefits. My husband applied for child in care benefits for our daughter, reducing the amount our daughter receives due to family maximum limits, but resulting in a greater overall earnings benefit to our family. My 66 year old husband hopes to wait to take his SS benefit at age 70.
When our disabled adult chiild moves from our home in the future her DAC benefit will increase as the child in care benefit goes away. When my husband files for his SS benefit, her DAC benefit will increase as his earnings are greater than mine.
Thank you for your help and explanations! Your Maximize My Social Security program has helped us in our decision making process which are complicated with disability considerations.

Hi,

I can't give you a definite answer without more information, but if you are classified as an employee and you receive a W-2 form then the earnings would count for Social Security earnings test purposes even if you are allowed to exclude the earnings from your gross income based on IRS regulations. If you don't receive a W-2 form, then the only other way that your caregiver income would count for earnings test purposes would be if the IRS requires you to report the income as self-employment earnings on your tax returns.

Best, Jerry