Can I Still Use The Annual Method If I File At Age 62 This Year?

Category: 
May 9 2019 - 5:33pm

1- I am self-employed. If I retire at 62 in April of 2019 can I still use the Annual method for the cap on what I can earn in 2019? 2- For 2019 and on-going, If I use either the Annual or the monthly method of calculating my maximum earning over and above my SS do my job expenses lower my income? For example, if I drive for Uber does my cost of maintaining a Car the .58 cents per mile okay to deduct from my earnings?

Hi,

Yes, if you file for your benefits any time this year you could potentially use either the annual earnings test (https://www.ssa.gov/planners/retire/whileworking.html) or the monthly retirement test (https://www.ssa.gov/planners/retire/rule.html).

Countable earnings for the earnings test consist of any combination of gross wages and/or net earnings from self-employment. If your earnings as an Uber driver are classified as self-employment earnings then your countable earnings would be your net profit after deducting your allowable business expenses. Specifically, Social Security goes by the amount of your net self-employment earnings on which you pay Social Security taxes, which is calculated on Schedule SE of your tax return.

However, earnings aren't normally used as the criteria for self-employed people under the monthly retirement test. Instead, Social Security uses an hourly guideline to determine if a self-employed person's services are substantial in a given month. The monthly substantial service guideline is 45 hours for most categories of self-employment, but can be as little as 15 hours for highly skilled professions like doctors. So, if you're self-employed as an Uber driver the monthly test would allow you to be paid for any month(s) in which you devote no more than 45 hours to your business (https://secure.ssa.gov/apps10/poms.nsf/lnx/0302505065).

Before filing for reduced benefits at age 62, you should strongly consider using our software to fully explore and compare all of your options.

Best, Jerry