Your clients can work and collect Social Security benefits at the same time, but they need to be careful, warns the California Society of CPAs.
The Social Security Administration imposes restrictions on benefits depending on your age and how much you earn, the society says.
If a client is not full retirement age, which is 66 for most people, the Social Security Administration will deduct $1 for each dollar earned over $15,720 a year. If he or she turns 66 during the year, the client can make up to $41,880 in the months leading up to their birthday. If the income for those months is over the limit, $1 will be deducted for every $3 earned.
After full retirement age, there is no restriction on the amount that can be earned.
Interest income, pensions, annuities and investment income are not considered income for these calculations. Any changes in income need to be reported to the Social Security Administration when they occur.
While the client continues to work, he or she still will be paying into the Social Security fund.
The CPA society warns that anyone thinking of taking Social Security benefits before full retirement age should do the necessary research to determine what strategy works best.
Social Security can be very complicated, and regulatory and legal changes may alter the numbers, the society says.
“Before making a decision about simultaneously working and collecting benefits, consult with a financial professional so there are no unpleasant surprises at tax time,” the CPA society says.