I am thinking of retiring when I am 63 and collecting Social Security benefits so that I can write full-time. I understand that, if I do, and I make money on my writing, Social Security will withhold $1 for every $2 I would make over $17,040. My question: A scenario -- The wonderful dream comes true and, for my novel, I get a million dollar advance. Does this mean that Social Security would withhold $491,480?
No. For earnings test purposes, Social Security only withholds up to the full amount of your yearly Social Security benefits (https://www.ssa.gov/planners/retire/whileworking.html). They can't touch your actual earnings. If you did earn a million dollars in some year prior to reaching your full retirement age (FRA), it would simply mean that you wouldn't be eligible to receive any Social Security benefits for that year. Your benefit payments could then resume the following year as long as you didn't earn over the earnings test exempt amount in that year.
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