Beneficiaries may receive Social Security retirement, dependent, or survivor benefits
and work at the same time. Under the earnings test, we will reduce a beneficiary’s
monthly benefits by the amount of his or her excess earnings if the beneficiary is
under or in the year of FRA. The earnings we apply to the ET include wages, self-employment
income, or both. For additional information on calculating excess earnings, see RS 02501.080.
Neither the earnings test (ET) nor the monthly earnings test (MET) applies to a beneficiary
who has no excess earnings, unless non-service months apply in the grace year.
1. What earnings to count for the annual earnings test (AET)
If under FRA, count the beneficiary’s earnings for all months of his or her taxable
year to determine excess earnings even though he or she may not be entitled to benefits
during all the months of that year.
b. Beneficiary in the year of FRA
In the year of FRA, count the beneficiary’s earnings for all months of his or her
taxable year up to but not including the month of FRA to determine excess earnings
even though he or she may not be entitled to benefits during all the months of that
For more information on exempt amounts, refer to RS 02501.025B.1.
2. Monthly earnings test (MET)
The MET applies to specific years, known as grace years. When applying the MET to
beneficiary’s earnings, consider the following:
For beneficiaries under FRA, use the entire year’s income to calculate the amount
of excess earnings. In the year a beneficiary reaches FRA, use the earnings for all
months up to but not including the month of FRA to calculate excess earnings; and
Regardless of the excess earnings amount, pay full benefits for any month the beneficiary
neither earns wages higher than the monthly exempt amount nor performs substantial
services in self-employment. To determine substantial services in self-employment,
see RS 02505.065. For information on grace years, see RS 02501.030B.
For additional information on applying the monthly earnings test, see RS 02501.030 or for the monthly exempt amounts, see RS 02501.025.
3. FRA when applying AET for RIB and WIB
Always use the FRA for retirement insurance benefits (RIB) when applying the AET for
RIB or widow(er)’s insurance benefits (WIB). Although FRA for WIB may be earlier,
the FRA for RIB is controlling for AET purposes. This rule applies even if the beneficiary
is not entitled to RIB.
4. The deduction rate for AET
The age of the beneficiary determines the rate at which we deduct excess earnings
from his or her benefits. For beneficiaries who:
have not reached their year of FRA, deduct $1 from benefits for each $2 earned over
the annual exempt amount.
are in the year they attain FRA, count only earnings before the month of attainment
of FRA and deduct $1 from benefits for each $3 earned over the full annual exempt
amount in the months prior to FRA.
For additional information on exempt amounts and deduction rates, refer to RS 02501.025D.
5. Who is not subject to the ET
The ET generally does not apply to disabled beneficiaries, divorced spouses who might
otherwise be offset based on the number holder’s (NH) earnings, or beneficiaries working
outside the U.S. However, there are exceptions for these types of cases as discussed
in RS 02501.021B.5.a. in this section.
a. When ET does not apply to disabled beneficiaries
The ET does not apply to beneficiaries receiving:
Disability insurance benefits (DIB),
Disabled widow(er) benefits (DWB), and
Childhood disability benefits (CDB).
For a beneficiary receiving DIB, DWB, and CDB, we apply the ET to any month he or
she has excess earnings and receives:
RIB while being simultaneously entitled to DIB although the entitlement to DIB continues
Reduced RIB prior to his or her entitlement to DIB.
If a disabled beneficiary performs any work activity, we look at that activity to
determine whether the disability has ceased. For additional information on the suspension
of DIB payments because of work activity, see DI 10105.095.
b. When ET does not apply to divorced spouses
The ET does not apply to divorced spouses based on the wage earners excess earnings
wage earner is entitled to benefits prior to the month of divorce; or
wage earner’s month of entitlement (MOE) is in the month of divorce or later and the
spouse has been divorced from the wage earner for at least 2 years.
c. When ET does not apply to foreign work
The ET does not apply to a beneficiary who works outside the U.S. when Social Security
does not cover the work. However, the ET does apply to covered work that a beneficiary
performs outside of the U.S.
For additional information on working outside the U.S., see RS 02605.000
6. When the ET no longer applies
Effective 1/2000, the ET no longer applies to a beneficiary beginning in the month
he or she attains FRA. For a history of how the ET has evolved, refer to the following:
ET applied to all beneficiaries; then
The Social Security Amendments of 1950 provided an exemption for beneficiaries age
75 and over; then
Before 1983, the ET no longer applied at age 72; then
Before 2000, the ET no longer applied at age 70