How is 2019 Substantial Earnings calculated? A person would need to make almost $4.00 an hour more than minimum wage to make 2018 Substantial Earnings. This discriminates against people working at minimum wage. How is this fair? Hi, For the benefit of others who may be reading this, 'substantial earnings' is the minimum amount of Social Security covered earnings that a person must earn in a
year in order to be credited with a year of coverage (YOC) used to determine whether or not they are exempt from the Windfall Elimination Provision (WEP). The annual substantial earnings amount has no significance outside of the WEP provision (https://www.ssa.gov/pubs/EN-05-10045.pdf). WEP can only affect the Social Security retirement or disability benefits of someone who also receives a pension based on their earnings which
were exempt from Social Security taxes. A person with at least 30 YOCs is exempt from any WEP reduction to their Social Security benefits, and people with 21 to 29 YOCs can lessen the WEP reduction. For earnings years prior to 1979, the substantial earnings amount is based on 25% of the maximum amount of earnings subject to Social Security taxes. For years after 1978, the substantial earnings amount is set at 25% of the maximum amount of earnings that would have been subject to Social Security taxes prior to changes made in the 1977 Social Security amendments. The 1977 amendments basically increased the maximum annual amount of earnings subject to Social Security taxes, so basing the substantial earnings amount on 25% of the old-law rules actually limits the substantial earnings amount to less than 25% of the new law maximums (https://www.ssa.gov/OACT/COLA/yoc.html). For example, the 2019 substantial earnings amount of $24,675 is roughly 18.57% of the new law 2019 maximum earnings that will be subject to Social Security taxes (i.e. $132,900). Whether or not the method for calculating substantial earnings is fair depends on each person's perspective. However, the bottom line is that the substantial earnings amounts are based on the calculation method passed into law by Congress, so it would require an act of Congress to change the way that substantial earnings are figured. Best, Jerry We, Yahoo, are part of the Yahoo family of brands. By clicking ‘Accept all’ you agree that Yahoo and our partners will process your personal information, and use technologies such as cookies, to display personalised ads and content, for ad and content measurement, audience insights, and product development. The personal information that may be used
Click ‘Manage settings’ for more information and to manage your choices. You can change your choices at any time by visiting your privacy controls. Find out more about how we use your information in our privacy policy and cookie policy. According to the Social Security Administration, substantial earnings is defined as an amount equal or above the amounts shown in the table below. This only applies to potential elimination or reduction of Windfall Elimination Provision (WEP) impact if you are receiving a pension from non-SS-covered work. See this article about the Windfall Elimination Provision for more details.
What is the definition of substantial earnings?“Substantial Earnings” is a term that describes the minimum qualified earnings for a particular past year, for the purpose of computing the Windfall Elimination Provision.
What is included in earnings for Social Security?What Income Is Included in Your Social Security Record? (En español) Only earned income, your wages, or net income from self-employment is covered by Social Security. If money was withheld from your wages for “Social Security” or “FICA,” your wages are covered by Social Security.
What earnings reduce Social Security benefits?If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2022, that limit is $19,560. In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit.
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