I am often asked my opinion on reporting wages to Social Security when an individual is receiving Social Security Disability (SSDI) or Supplemental Security Income (SSI) benefits. My response—early and often!
Each program has different ways to evaluate wages in determining continuing disability benefit payments. You can check out my general work incentives sheet (under the Free Guides tab) for more specific information. However, Social Security doesn’t have “real time” access to your wages. Once your work year is over, you and your employer report your wages to IRS, who in turn, shares the information with Social Security. Eventually, Social Security knows how much your total wages were for each employer. But SSDI and SSI benefits are based on your monthly wages, not your total yearly wages. So, without your reports to Social Security, there is an information gap in getting a good picture of what adjustment—if any—should be made to your disability benefits.
For example, you are receiving Social Security Disability (SSDI) benefits. You tried to work last year and earned a total of $6,000. You have never worked since drawing your SSDI benefit. You remember someone telling you about working for up to nine months without worrying about losing your benefits, so you don’t think it’s important to report your wages. Social Security only sees that your earned $6,000. Did you earn it over 12 months? Did you work full-time for four months? The difference? If you haven’t used up your 9-month trial work period and you worked evenly over 12 months, the $500/month you earned wouldn’t even be enough to trigger the use of one of your trial work period months. Conversely, if you worked four months at $1,500/month, you have triggered four months of your trial work period. Or, maybe you have used up your entire 9-month trial work period. Earnings at $500/month would not be considered substantial, and benefits would not be impacted. However, earnings above $1,180/month (see general work incentives sheet for other considerations) could suspend benefits. Social Security cannot discern the facts from your W-2 form. Diligent reporting to Social Security is required to decide if there is any effect on your benefits.
Similarly, SSI, because of it’s needs-based structure, counts one-half of your gross wages over $65/month (see general work incentives sheet for additional possible deductions). While you are always better off working, the amount of your monthly SSI benefits are impacted by how much you made.
Social Security does eventually catch up to the wages and will do reviews to determine if the wages impact your benefits. But, by that time, it’s too late. If there should have been an offset to your benefits, the offset will be applied retroactively, causing overpayments.
Being proactive and reporting your wages regularly can help you to be better informed on your wages impact (if any) on your particular benefit type, and can prevent overpayments from occurring. This puts you in charge of your financial future.
Social Security has recently enhanced the ease with which you can report your wages monthly. By setting up a mySSA account through Social Security’s website (www.ssa.gov), you can easily enter your paycheck stub information. Social Security will send you confirmation of your report. For those receiving SSI benefits, the benefits will be automatically adjusted. For SSDI beneficiaries, the report still requires you to periodically check in with Social Security to see where you are in the work incentives process (trial work period, extended period of eligibility, etc.) but there are plans to enhance this in the future to even make the SSDI more automatic in its ability to react to your report.
Visit Social Security website, https://www.ssa.gov/news/newsletter/, for more information.
Before using the mySSA portal to report your monthly wages, you will first need to make sure that Social Security has information on that employer in file and has done the initial review. The employer information has to be “set” in their records so that you can build on that information each month.
You can contact Social Security at 1-800-772-1213 for additional information, or by visiting their website, www.ssa.gov. You are also welcome to send me any questions you may have on this topic. I’ll be more than glad to help in any way that I can.
