I am 65 and will file for ss 8 months shy of my 66th birthday. I am married with two children under 18 (14, 12). My wife (age 54) has a stay at home business which, with deductions (including her ira) did not make a profit, but will hopefully do so soon. When I visited the SS office they told me that my kids can get benefits, and that my wife can also but her earnings can't exceed 1,400 per month. Here are my questions;

I assume that 1,400 is net, similar to the net earnings that appears on her schedule C? So, in essence, she will be capped at 16,800 net earnings per year. Does that seem correct?

Second, now that I am retiring, and will soon have no cap, I was going to start helping in her business, and moving forward we will file as joint owners. Does that mean her cap will remain 16,800 but my portion of the business will not have a cap?

Finally, while I assume her income is restricted to that 16,800 per year, tracked with the Schedule C. The rep at the SS office said they check the income each month, but she could not confirm that they use the net earnings for each month?

I'll greatly appreciate any advice.

Thanks,

Hi,

First of all, the amount that your wife could earn without losing any benefits this year is $16,920, not $16,800 (https://www.ssa.gov/planners/retire/whileworking2.html). The countable earnings are the net earnings subject to self-employment taxes as shown on Schedule SE of her tax return. There is an alternate monthly test that can be used only in the first year of entitlement that for self-employed people is based on the number of hours that the person devotes to their business in a month, as opposed to the net profits in a month. In most cases, 45 hours in a month is considered a non-service month, but the limit can be as low as 15 hours in the case of highly skilled occupations (https://www.ssa.gov/planners/retire/rule.html).

If you join your wife in the business and split the earnings somehow, either by receiving a salary or forming a partnership, only your wife's reported earnings would matter once you reach full retirement age since there is no limit on your earnings at that point.

All of the above may largely be for naught, however, since the total amount payable from your record will likely be the same whether or not your wife receives benefits. This is because there is a family benefit maximum that limits the total that can be paid on any individual's record (https://www.ssa.gov/OACT/COLA/familymax.html). If your wife and 2 children are all eligible on your record, they will likely end up splitting the amount available for auxiliaries 3 ways, as opposed to 2 ways if only your children were drawing.

You may want to strongly consider using the maximization software on this website in order to determine the best filing strategy for you and your family.

Best, Jerry