Qualifying Supplemental Security Income (SSI) beneficiaries or students will be able to keep more of their paychecks in 2023 due to an 8.7% rise in the number of earnings that can be deducted.
The SEIE is a work incentive sponsored by the Social Security Administration (SSA) that allows certain Supplemental Security Income (SSI) beneficiaries to subtract earnings from their income to reduce tax withholding. According to the SSA, recipients must be under 22 years old and regularly enrolled in school to qualify.
SSA Increases Annual Limits
Currently, the amount that can be excluded is $2,220 every month, with an annual cap of $8,950. This is compared to the 2022 exclusion of $2,040 per month and $8,230 per year.
The Social Security Administration (SSA) normally modifies the monthly benefit and annual maximum yearly, based on the consumer price index. Continued inflationary pressures indicate that the SEIE is expected to rise again in 2024.
Make sure you fit the SSA’s criteria of “frequently attending school before applying for the SEIE. To qualify, you must meet one of the following requirements:
Participate in at least eight hours of college or university each week on a semester or quarter basis. Attend classes for grades 7-12 for at least 12 hours each week.
Are engaged in a job-readiness training program for at least 12 hours per week, or 15 hours per week if the program includes shop practice.
7th through 12th graders who are homeschooled for at least 12 hours per week and in conformity with the home school law of their state or authority.
Certain time limits may be lifted if a student is unable to satisfy them due to unforeseen circumstances, such as illness.
According to the South Dakota Department of Human Services, the SEIE is applied to a student’s gross wages prior to general and earned income exclusions. The annual SEIE maximum applies to the period beginning in January and ending in December of each calendar year.
Since the SEIE applied in a given month cannot be allocated, once the monthly maximum is met, no exceptions can be granted until the following month.
Read more: How to get your Social Security payment worth $1,827 today?
How Does Earned Income Work?
Earned income includes wages, salaries, commissions, bonuses, tips, and net earnings from self-employment. In some situations, it may also include long-term disability, union strike benefits, and payouts from certain deferred retirement compensation agreements.
Contrast earned income with unearned income, also known as passive income, which is money that is not generated via labor.
For tax purposes, earned income is any income you receive for labor you have done for an employer or a business of your own.
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