Discussion:W-2 earnings for social security earnings limit
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Discussion Forum Index --> Basic Tax Questions --> W-2 earnings for social security earnings limit
Discussion Forum Index --> Tax Questions --> W-2 earnings for social security earnings limit
| 20 February 2008 | |
| Basic question here that isn't easily found on SSA website. When determining the earnings limitation for those receiving ss benefits does SSA use gross wages (before 401(k) contribution) or taxable wage? | |
| 20 February 2008 | |
| See the instructions for Form W-2. Briefly, box 3 (social security wages) includes elective deferrals reported under code D in box 12 (401-k plan contributions), whereas taxable wages in box 1 would exclude them. | |
| 20 February 2008 | |
| I think you are misunderstanding my question....let me rephrase....I have a client who is receiving social security benefits and is also working. He wants to know, in determining the maximum amount he can earn and not lose his benefits, if he is to take into account his gross wages (before 401(k) contributions) or his taxable wages (which would be after his 401(k) contributions. | |
Death&Taxes (talk|edits) said: | 20 February 2008 |
| Trillium is perfectly clear: earnings for Social Security purposes, before the 401K.
"Wages for Social Security purposes are gross wages - wages before any payroll deductions for income tax, Social Security tax, dues, insurance, or other deductions by the employer. We use gross wages as the basis for Social Security credit and for determining whether benefits must be withheld because of earnings." Social Security FAQ | |
| February 21, 2008 | |
| Hmmm, so if an employer does not disclose Sec. 125 withholdings on the W2, the employee would be able to get more benefits than otherwise would be allowed. Another reason to use Box 14 on the W2. | |
| February 21, 2008 | |
| All I did was read the quote D&T included above. If the Sec. 125 withholdings are not shown in Box 14, how would the SSA know about them? | |
RoyDaleOne (talk|edits) said: | 21 February 2008 |
| I do not believe the question was clearly answered.
Because I have this issue, also I will try and find the coorect answer tomorrow when I am in the office. The term the SSA used with me is "earned wages". This is an SSA question and definition not necessarily tied to IRS definitions. However, the answers could be correct. | |
Death&Taxes (talk|edits) said: | 21 February 2008 |
| I agree with you Roy; that answer I dragged from the FAQ at their website is not that clear, but I cannot believe it would be the amount after the 401K deduction. It would make sense that it would be the amount credited to the recipient's account for the year. | |
RoyDaleOne (talk|edits) said: | 21 February 2008 |
| From SSA Web Site
The following types of earnings count for earnings test purposes: All wages for employment covered by Social Security. http://www.ssa.gov/OP_Home/handbook/handbook.18/handbook-1811.html | |
Death&Taxes (talk|edits) said: | 21 February 2008 |
| Thanks for finding that! Basically it is the Publication 15 definition of FICA wages plus some very interesting additions such as family employment. | |
| February 22, 2008 | |
| Well, it sounds like Sec. 125 plan deductions would be covered as well. I wonder how many people voluntarily admit to amounts received under the last item (cash). | |
