Ascertain whether or not the earnings in the taxable year beginning with the first month of entitlement exceeded the annual limit for the year. If such earnings are higher than the limit, without fault cannot be found.

If recovery cannot be deemed against equity and good conscience, develop defeat the purpose or other applications of against equity and good conscience.

Will Grayson III, age 63, became entitled to retirement benefits in March 2005. Will earned $9,000 in January and February. The AET for 2005 is $12,000 per year for a person who will not reach full retirement age (FRA) during the year.

Will's employer reported earnings of $21,000 for 2005 on their W-2, which resulted in an overpayment of benefits for 2005. Development revealed that Will misunderstood the retirement test and believed an individual could earn the allowable limit ($12,000) in the months after entitlement began.

To determine if this policy applies, subtract the amount Will earned before the entitlement to retirement benefits began, from the total earnings for the year:

$21,000

-$9,000

$12,000$

Will earned $12,000 in the months during entitlement to retirement benefits. Since this amount does not exceed the annual earnings test, we can assume that Will misunderstood that the SSA annual earnings test also included the annual earnings before an individual becomes entitled to retirement benefits.

SSA can deem that Will is not at fault for causing this overpayment, based on GN 02250.150. In addition, SSA would find that recovery of this overpayment is against equity and good conscience, and therefore the overpayment would be waived.