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Social Security reduction for working while receiving soc. sec. before full retirement age

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Social Security reduction for working while receiving soc. sec. before full retirement age

Hello,

 

My question concerns the way the reduction in social security benefits is calculated when you are working while you are still under full retirement age. Up to roughly $21,000 there is no reduction and beyond that there is a $1 reduction for every @$2 earned above the threshold amount of about $21,000. My question is whether this is based on gross income or net income.  For example, if I receive a gross pay of $40,000 YTD and, and I have thus far received a net income of $26,000, will my reduction in benefits be based on the $40,00 number or $26,000?   In other words, am I about $4,00 over the $21,000 threshold amount or $19,000 over it?

 

I guess this boils down to knowing exactly what is meant by the word "earn". Is it gross pay or net pay?

 

Thank you.

Jacob

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