By Reg Jones
Benefit reductions from home sale
December 27th, 2010 | Benefits Earnings test RETIREMENT SOCIAL SECURITY Windfall elimination provision
Q: A friend told me that her monthly Social Security benefit was reduced by $250 because of the profits made from the sale of a house that she inherited from her mother. Can this be true?
A: The Social Security earnings limit only applies to earnings from wages or self-employment, and then only for those individuals who haven’t reached full retirement age. In the ordinary course of events, income received through the sale of a home wouldn’t be considered to be earnings. However, if she reported any portion of the proceeds as earnings on her federal income tax return (because she served as a real estate agent, for example) that amount would be subject to the earnings limit.
Tags: earnings, earnings limits, IRS, SOCIAL SECURITY, Social Security benefits, Social Security earnings limit, taxes